* Portugal bonds, stocks slide as crisis deepens
* Global equity markets slide in rocky trade
* Oil rises on worries over Mideast tensions
By Herbert Lash
NEW YORK, July 3 (Reuters) – Global equity markets slid on
Monday on worries over signs of slowing growth in China and
deepening political turmoil in Portugal, where talks over the
government’s future weighed on the euro and threatened to
reignite the euro zone crisis.
Portugal’s 10-year bond yield shot above 8 percent and its
stock market slumped 6 percent as markets reeled on fears a snap
election could derail Lisbon’s exit next year from a bailout by
the European Union and International Monetary Fund.
Trading on Wall Street was choppy, trading near break-even.
Stocks initially appeared poised to turn positive until they
were pushed lower by a report that showed the pace of growth in
the U.S. services sector slowed in June to its weakest level in
over three years. Stocks later toyed with positive territory.
The Institute for Supply Management said its services index
fell to 52.2 from 53.7 in May, short of economists’ forecasts
for a gain to 54. While a reading above 50 indicates expansion,
growth was at its lowest level since February 2010.
“There’s a perfect storm of bad news out there, and things
could get very sloppy today,” said Art Hogan, managing director
at Lazard Capital Markets in New York.
U.S. equities were whiplashed on light volume as many market
participants were out of the office ahead of the Fourth of July
holiday on Thursday. U.S. equity and bonds markets will close
early on Wednesday and reopen on Friday.
MSCI’s all-country world equity index fell
0.75 percent. In Europe, the broad FTSEurofirst 300 of
leading regional shares fell 0.92 percent to 1,148.09 points,
while Portuguese stocks fell 5.89 percent.
The Dow Jones industrial average was down 10.06
points, or 0.07 percent, at 14,922.35. The Standard & Poor’s 500
Index was down 5.89 points, or 0.36 percent, at 1,608.19.
The Nasdaq Composite Index was down 1.24 points, or 0.04
percent, at 3,432.16.
Chinese shares fell after a read on the country’s services
sector compounded concerns about slowing growth momentum, while
U.S. oil hit a 14-month high on fears political unrest in Egypt
could destabilize the Middle East and spark supply disruptions.
U.S. private employers hired more workers than expected in
June, another report showed, supporting the view of overall
moderate job gains but one that might allow the Federal Reserve
to reduce stimulus later this year.
The yen rose across the board as political wrangling in
Portugal and Egypt prompted investors to seek refuge in the
Japanese currency, although it trimmed gains against the dollar
after data showed a stabilizing U.S. labor market.
In early New York trading, the dollar fell 1.01 percent to
99.60 yen, slightly recovering from the day’s lows of
99.24 yen. The euro was also hit, and was down 1 percent at
129.29 yen.
Trading in government bond markets also was rocky.
The benchmark 10-year U.S. Treasury note was up
4/32 in price to yield 2.4548 percent after earlier trading
lower.
German Bund futures pared gains after U.S. data showed
private sector employers added more jobs than forecast in June.
Bund futures were last up 56 ticks on the day at
142.25, having traded around 142.43 before the data.
Crude prices rose on a sharp decline in crude stockpiles in
top consumer the United States and political unrest in Egypt
sent U.S. oil to a 14-month high.
U.S. crude rose above $100 a barrel, closing its gap with
Brent, after the American Petroleum Institute reported that U.S.
crude stocks dropped by 9.4 million barrels last week. Analysts
had expected a draw of 2.3 million barrels.
U.S. oil was up $1.83 at $101.43 a barrel, having
touched $102.18 in earlier trade. Brent rose $1.40 to
$105.40.
