World stocks fall as Portugal bond yield rises

Egypt adds to worries over euro-zone debt crisis but Wall Street steady on jobs data

PUBLISHED : Thursday, 04 July, 2013, 12:00am
UPDATED : Thursday, 04 July, 2013, 3:48am

Stocks fell around the world, led by Portugal as the nation's 10-year bond yield surpassed 8 per cent for the first time since November last year after two ministers quit.

Crude oil rose above US$100 a barrel amid concern unrest in Egypt will threaten supplies.

Portugal's main equity gauge tumbled 5.9 per cent, with trading volumes more than six times the 30-day average, and the 10-year bond yield rose as much as 139 basis points to 8.11 per cent.

The resignation of two ministers signalled Portugal will struggle to implement further budget cuts as its bailout programme enters the final 12 months.

The Stoxx Europe 600 Index slid 1.1 per cent, with trading volumes 28 per cent more than the 30-day average. Portugal's two largest lenders fell more than 10 per cent.

The MSCI Emerging Markets Index fell for a second day, sliding 2 per cent, the most since June 20.

Turkey's benchmark gauge dropped 3.5 per cent and two-year yields jumped 22 basis points to 7.56 per cent after inflation accelerated.

But US stocks were little changed as reports depicting an improving job market tempered Egypt and Portugal concerns. The Standard & Poor's 500 Index slipped 0.3 per cent to 1,610.03 points. The Dow Jones Industrial Average swung between gains and losses near the 14,930 level.

US private employers stepped up hiring last month and new applications for unemployment benefits fell for a second straight week last week, pointing to an improving labour market.

Still, the pace of economic growth remains lacklustre, with other data yesterday showing a sharp slowing in activity in the service industries last month and a wider trade deficit in May.

Private payrolls increased 188,000 last month, the ADP National Employment Report showed, up from 134,000 jobs added in May.

Economists had expected the report, jointly compiled by payrolls processor ADP and Moody's Analytics, to show a gain of 160,000 private jobs.

In a separate report, the Labour Department said initial claims for state unemployment benefits slipped 5,000 to a seasonally adjusted 343,000.

"The (jobs) market is holding firm," said Mark Zandi, the chief economist at Moody's Analytics.

Reuters, Bloomberg