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GLOBAL MARKETS-US stocks, euro fall on Greek default worries

Published 06/13/2011, 01:25 PM
Updated 06/13/2011, 01:32 PM

* U.S. stocks reverse gains after S&P downgrades Greece

* Greek CDS at record high; euro at record low vs Swiss

* China data, U.S. growth concerns prompt risk unwinding

* U.S. oil prices fall, gold near 10-day lows (Updates markets, adds quote)

By Richard Leong

NEW YORK, June 13 (Reuters) - Wall Street stocks and the euro fell on Monday as a rating agency downgrade of Greece compounded worries over a possible Greek default and sapped an early revival in risk appetite.

Standard & Poor's on Monday cut Greece's credit ratings by three notches to CCC, saying the debt-laden country is increasingly likely to restructure its debt in a way the agency would consider a default. For more, see [ID:nWNA0841]

The cost of insuring Greek sovereign debt against default rose to an all-time high, while the euro hit a record low against the safe-haven Swiss franc.

Weaker Chinese data fueled concerns about slowing global growth and knocked non-U.S. shares to a 12-week low, according to the MSCl Global Equity Index <.MIWD00000PUS>. The index stabilized briefly on modest early gains in U.S. and European stocks <.FTEU3>, then subsequently slipped back into negative territory after S&P's rating move on Greece.

Anxiety over a Greek default reduced risk appetite, fueling an unwinding of positions in oil and precious metals.

"If Greece goes under, that would affect U.S. and European banks. If that's the case, that's going to hurt the (stock) market," said Lou Brien, market strategist at DRW Trading in Chicago.

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In U.S. trading, the Dow Jones industrial average <.DJI> was down 2.04 points, or 0.02 percent, at 11,949.87. The Standard & Poor's 500 Index <.SPX> was down 1.82 points, or 0.14 percent, at 1,269.16. The Nasdaq Composite Index <.IXIC> was down 7.85 points, or 0.30 percent, at 2,635.88.

The euro fell against the Swiss franc, but gained versus the U.S. dollar on expectations that euro zone interest rates would remain higher than those in the United States.

The euro touched a record low of 1.2004 Swiss francs on the EBS trading platform

The euro

In the oil market, U.S. crude oil fell 2 percent to $96.95 a barrel, prompted by a report of more supply from Saudi Arabia. The world's biggest oil exporter will raise output to 10 million barrels per day in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone in pumping more outside official OPEC policy.

Bullion prices fell 0.6 percent on the day after S&P move on Greece reduced euro's gain against the dollar. Spot gold

In government debt trading, benchmark U.S. 10-year yields

Five-year credit default swaps on Greek sovereign debt rose to a record high of 1,613.33 basis points prior to the S&P downgrade, according to data monitor Markit. (Additional reporting by Rodrigo Campos, Gene Ramos, Gertrude Chavez-Dreyfuss and Steve C. Johnson; Editing by Dan Grebler)

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