Tuesday, 10 July 2012

Stocks fall as Spain's 10-year yield exceeds 7% and Asia reports weak economic data

Markets started the week on a negative note. Stocks fell on Monday, the S&P 500 falling 0.2 percent and the STOXX Europe 600 falling 0.4 percent. Continuing concerns over Europe's debt crisis pushed Spain's 10-year yield to 7.06 percent even as Germany and France sold six-month bills at negative yields.

Earlier in the day, Asian stocks had suffered steep falls, the Shanghai Composite Index in particular falling 2.37 percent. The falls were partly a delayed reaction to the US jobs data on Friday but also due to weak data out of Asia on Monday.

China reported on Monday that its inflation rate fell to 2.2 percent in June from 3.0 percent in May, leading to fears of deflation. Producer prices fell 2.1 percent in June from a year ago.

Reports from Japan on Monday were also negative. Its current account surplus plunged 62.6 percent in May from a year earlier while core machinery orders fell 14.8 percent in May from the previous month.

In addition, Japan's service sector sentiment deteriorated for the third straight month in June. The economy watchers survey's diffusion index for current conditions fell to 43.8 in June from 47.2 in May and the future conditions index fell to 45.7 from 48.1.

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