Japan’s Nikkei 225 (NKY) Stock Average fell by the most in three months as the euro weakened against the yen on mounting concern Greece will default on its debt and after reports showed the U.S. economy is cooling.
Toyota Motor Corp. (7203), the world’s largest carmaker, lost 1.7 percent. Mitsubishi Corp. (8058), Japan’s biggest commodities trader, retreated 2.8 percent after crude and metal prices dropped. Mitsui Fudosan Co., Japan’s largest developer by sales, slumped 3.6 percent after the supply of new condominiums offered in Tokyo rose less-than-expected following March’s earthquake.
European stocks fell to a three- month low as Greek Prime Minister George Papandreou said he will reshuffle his cabinet and seek a confidence vote.
Vedanta Resources Plc (VED) led basic-resource shares lower as metal prices fell. Lenzing AG (LNZ) dropped 2.7 percent as the Austrian maker of textile fibers and its majority shareholder B&C Industrieholding GmbH sold about 619 million euros ($877 million) of shares. Carrefour SA (CA) tumbled 3.5 percent as UBS AG recommended selling shares of the French retailer.
European Union talks to forge a new bailout to prevent the first euro-area default stalled. The impasse over the aid formula and speculation that a government shakeup would disrupt the passage of budget cuts and asset sales sent Greek bonds and the euro plunging yesterday.
The International Monetary Fund today said it is ready to continue supporting Greece if the economic measures agreed upon as part of a bailout package with the European Union are adopted.
European stocks maintained declines today even after reports showed that housing starts in the U.S. increased more than forecast in May and fewer Americans than predicted filed applications for unemployment benefits last week.
U.S. stocks erased gains, threatening to wipe out the 2011 advance in the Standard & Poor’s 500 Index, amid concern large banks will need to increase reserves to comply with proposed international regulations.
JPMorgan Chase & Co. and Citigroup Inc. retreated at least 1.5 percent, wiping out a 1.1 percent gain for financial shares in the S&P 500, as people familiar with the matter said international financial supervisors are considering capital surcharges of as much as 3.5 percentage points on the largest banks if they grow bigger. Early gains in the market followed data showing jobless claims decreased more than forecast and housing starts topped economists’ estimates.
The Standard & Poor’s 500 Index lost 0.2 percent to 1,263.42 at 2:08 p.m. in New York after rallying as much as 0.7 percent earlier. The drop trimmed the benchmark gauge’s year-to- date advance to less than 0.5 percent. The Dow Jones Industrial Average climbed 23.72 points, or 0.2 percent, to 11,920.99.
A gauge of 82 banks, insurers and investment firms has slumped 8 percent this year for the worst drop among the 10 major industries in the S&P 500. A subgroup of lenders has lost 12 percent, the second-biggest decline among 24 groups, amid weakening economic growth, growing regulatory scrutiny and reduced profitability from lending because of low interest rates.
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