Submitted by Fox First at Ten on June 13th
By SARAH DiLORENZOAP Business Writer
BRUSSELS (AP) - World stocks struggled Wednesday under concerns that Europe's debt crisis was deepening and threatening to infect the world economy.
While stocks opened initially up in Europe, the bad news from the regions quickly set in. Investors are nervously awaiting Greek elections on Sunday, when a party that's threatening to renege on the country's bailout terms could come away the big winner. That might force the country out the euro.
Attention is also focused on Spain, where borrowing costs rose to euro-era highs on Tuesday, increasing concerns that it could need a bailout. The country agreed last weekend to take a rescue package to help it shore up its banks, but investors worry the government may have trouble repaying the loans. The concerns about who would be next in Europe to fall into difficulty spread to Italy, which saw interest rates on 12-month bonds it was auctioning hit highs not reached since the start of the year.
Stocks slipped or moved sideways amid the uncertainty.
France's CAC-40 dropped 0.6 percent to 3,030, while the DAX in Germany fell 0.1 percent to 6,153. Only the FTSE index of leading British shares managed gains, ending up 0.2 percent at 5,484.
The euro mostly bucked the trend, however, moving up 0.7 percent to $1.2594.
"It definitely feels as though we are plodding along as many traders and investors watch from the sidelines until we know the result of the Greek elections next week," said Jordan Lambert, a trader with SpreadEx. "With the outcome hanging on a knife's edge, the markets are far away from pricing in either a Greek survival in, or exit from, the euro, meaning there could be a huge move after the election is complete."
The debt crisis is not just rattling financial markets, but also affecting households and businesses by creating uncertainty over the future of the economy. The latest report from Eurostat, the EU statistics agency, showed industrial production in April among the 17 countries that use the euro slipped 0.8 percent. Analysts noted that even that poor showing is worse than it seems because a cold Spring pushed up energy demand.
In the U.S., the government reported that retail sales fell in both April and May. But excluding gas station sales, where prices dropped throughout those months, retail sales grew modestly in May.
Wall Street hovered around where it closed Tuesday. The Dow Jones industrial average was up 0.1 percent at 12,586, while the S&P 500 was up 0.15 percent to 1,326.
Earlier in Asia, stocks had an equally choppy session.
Japan's Nikkei 225 index gained 0.6 percent to close at 8,587.84, after machinery orders rose 5.7 percent to the highest level in four years, Kyodo reported.
South Korea's Kospi swung temporarily into negative territory in early trading before closing 0.2 percent higher at 1,859.32. Hong Kong's Hang Seng also briefly dipped before rising 0.8 percent to 18,026.52.
Australia's S&P/ASX 200 fell 0.2 percent to 4,063.80. Benchmarks in New Zealand and Singapore fell but Taiwan's rose.
Mainland Chinese shares rose on hopes authorities would bring in more economy-boosting measures. The benchmark Shanghai Composite Index added 1.3 percent to 2,318.92 while the smaller Shenzhen Composite Index gained 1.8 percent to 959.11. Shares in biotechnology, insurance and power-related companies led the gains.
Amid concerns for the economy, which drives down energy demand, benchmark oil for July delivery fell 54 cents to $82.784 per barrel in electronic trading on the New York Mercantile Exchange.
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Kelvin Chan in Hong Kong and Fu Ting in Shanghai contributed to this report.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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