U.S. Sentiment Focused on Bank Linkages to Europe; Gold Down 2%

Bikram Pandey
12 Sep, 2011
New York City

The U.S. indexes opened lower on the new worries of the euro zone debt and tight linkages between banks across the Atlantic. French banks plunged on the Greek default worries and European markets extended losses of more than 2% for the second day. Oil rebounded 1% and gold dropped 2%.

[R]4:10 PM New York – The U.S. indexes opened lower on the new worries of the euro zone debt and tight links between banks across the Atlantic. French banks plunged on the Greek default worries and European markets extended losses of more than 2% for the second day. Oil rebounded 1% and gold dropped 2%.[/R]

U.S. indexes recovered from the losses of more than 1% after fresh euro area debt concerns resurfaced. Greece revised its economic shrinkage to 5.3% from 3.8% and French banks plunged 10% on the worries that the portfolio of sovereign bonds containing Greek bonds will suffer more than expected if Greece default.

The oil producing nations association, OPEC lowered oil demand growth for 2011 on weak global economic outlook.

In merger news, Broadcom agreed to acquire NetLogic for $3.7 billion. Colfax offered $2.4 billion for Charter International. Technip agreed to acquire Global Industries for $1.07 billion.

In earnings news, Brady fourth quarter net income soared 37% to $29.6 million. Broadcom agreed to acquire NetLogic for $3.7 billion in cash and Colfax agreed to buy Charter International Plc. for $2.4 billion. McGraw-Hill split up into two public companies. W.W. Grainger August sales grew 10%.

The European indexes plunged after reported on the rising worries of the capital adequacy at French banks. Italy sold €11.5 billion of Treasury bills at higher yields. Greece unveiled fresh austerity measures of €2 billion.

The OECD Index of leading indicators fell, Greek import price index rose and Italy’s industrial production dropped in July. Portugal and Denmark's inflation slowed in August.

The UK indexes declined on global economic woes. The Independent Commission on Banking proposed reforms to create a more stable and competitive UK banking system. Colfax offered to acquire Ireland-based Charter International for £1.53 billion.

The Australian benchmark index declined 3.7% on the global worries. The market overlooked sharp increase in China’s import and export and bank lending but focused on the euro zone. Cochlear plunged 27% after it announced its first recall of a range of hearing implants.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield increased to 1.95% and 30-year U.S. bond fell to 3.25%.

The U.S. dollar increased at $1.3629 to one euro and closed higher against the Japanese yen to 77.35 yen.

Immediate delivery futures of Texas crude oil increased $1.01 to $88.25 a barrel and futures of natural gas decreased 0.02 cents to $3.89 per mbtu and gasoline price fell 3.92 cents to 273.18 cents a gallon.

In metals trading, copper decreased 2.20 cents to $3.98 per pound, gold fell $44.20 to $1,815.20 per ounce and silver decreased $1.45 to $40.16.