By Agency reporter

Tuesday, 23 Nov 2010

Stocks fell, halting a three-day advance for the Standard & Poor‘s 500 Index, and commodities retreated after Ireland‘s financial bail-out failed to assuage concern that Europe‘s debt crisis may spread.

Bloomberg reported on Monday that Ireland‘s 10-year bond pared most of its earlier gain.

The S&P 500 slipped by 0.5 per cent to 1,193.54 in New York and the S&P GSCI Index of commodities declined by 0.4 per cent. The 10-year Irish bond yield dropped by four basis points to 8.31 per cent, after sliding to as low as 8.06 per cent.

The cost of protecting against a default by Ireland was little changed, erasing an earlier drop.

Ten-year United States Treasury yields lost six basis points to 2.82 per cent before a sale of $99bn of notes this week.

Banks led European and United States equities lower as Ireland became the second euro member to seek a rescue from the European Union and the International Monetary Fund, preventing a run on its lenders.

Moody‘s Investors Service said it might lower Ireland‘s credit rating by more than it previously anticipated as the aid plan threatened to boost the country‘s debt.

”The reality is that the structure is in place at the moment to put countries in life support but the missing link still remains the bigger issue of what do you do after that, a portfolio manager at Iveagh Wealth Fund in London, Mr. Cambiz Alikhani, said in an interview. ”Until that question is answered we are still in this rolling bailout situation which has been ongoing since 2008,” he added.

The S&P 500 index has risen by 17 per cent from its 2010 low on July 2 on optimism that the Federal Reserve‘s asset-purchase plan will stimulate growth and as quarterly results at companies surpass analyst projections.

The index slid the most in almost three months on November 16, plunging by 1.6 per cent, amid speculation that the debt crisis in Europe is worsening and that China will curb lending to slow inflation.

Europe‘s Stoxx 600 Index erased gains of as much as 0.8 per cent. Irish banks led declines on concern that a bail-out will dilute existing investor stakes.

Bank of Ireland tumbled by 20 per cent, while Irish Life & Permanent Plc sank by 25 per cent. Porsche SE led auto stocks higher, climbing by four per cent, after Bank of America Merrill Lynch recommended buying the shares, saying the German sports-car maker probably won‘t merge with Volkswagen AG.

 

Source: Punch