By Agency Reporter

Wednesday, 17 Nov 2010

World stocks fell for the seventh straight session on Tuesday on persistent worries over Ireland‘s debt problems and China‘s fiscal tightening, and Irish debt yields rose further before talks on the crisis.

Reuters reported from London on Tuesday, that concerns over more official steps in China to cool its liquidity-driven asset price rally, also weighed on copper as the country is a major consumer of commodities, while US Treasuries stabilised, following a sharp sell-off.

US stock index futures fell, signaling a weak open on Wall Street.

Ireland‘s bond yields rose ahead of euro zone talks in Brussels later in the day to find a way out of Ireland‘s debt problem.

Dublin, however, resisted calls to seek a state bailout by contending that only its banks may need help.

”We‘re waiting for news. I think the market has whipped itself into a frenzy and I‘m not convinced we‘re going to get anything substantial,” a London-based trader said.

The premium investors demand to hold Irish government bonds rather than German benchmarks widened to 575 basis points from around 562 bps at Monday‘s settlement.

The cost of insuring against debt default in Ireland, Portugal and Greece crept higher. Ireland‘s five-year credit default swaps rose 11 basis points to 508 bps, while those for Portugal were up 10 bps to 422 bps.

Irish stocks fell 0.8 per cent, Spain‘s share benchmark shed 1.5 per cent and the Thomson Reuters Peripheral Eurozone Countries Index eased 1.4 per cent.

The euro was steady at $1.3585, erasing gains after a stronger-than-expected reading of German ZEW institute‘s economic sentiment index.

Earlier in the day, the single currency hit its weakest since late September.

The dollar rose 0.3 per cent versus a basket of currencies.

US stock index futures dropped 0.6 to 0.7 per cent and Europe‘s FTSEurofirst 300 index eased 1.2 per cent

World equities measured by MSCI All-Country World Index fell 0.5 per cent, hitting a two-week low.

In Asia, China‘s share benchmark lost four per ncent, its lowest close in a month, on renewed talk of further policy tightening, and Japan‘s Nikkei average fell 0.3 per cent.

Oil lost 1.3 per cent to trade below $84 a barrel, and copper dropped 1.6 per cent, while safe-haven gold was steady at $1,360.20 an ounce.

Benchmark 10-year US Treasury yields recovered and traded at 2.9 per cent after hitting 2.97 per cent, the highest level in more than three months, on worries over the future of the Federal Reserve‘s $600bn bond program.

However, New York Fed President, Mr. William Dudley defended the US central bank‘s controversial bond-buying plan and said withdrawing the program could take years.

Credit Suisse private bank said in a note that any periphery inspired sell-off in European equities offered a buying opportunity for European export stocks.

Source: Punch