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GLOBAL MARKETS-Stocks slips on EU worries; dollar gains

Published 02/03/2010, 12:50 PM
Updated 02/03/2010, 12:54 PM
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* U.S. stocks decline on Pfizer, health-care stocks

* Euro falls vs dollar after Greek finance plan

* Bonds slip after U.S. data fuel hopes of job growth

* Oil slips on U.S. crude inventories rise (Updates with U.S. markets, changes dateline; previous LONDON)

By Herbert Lash

NEW YORK, Feb 3 (Reuters) - Global shares slipped and the dollar rose against the euro on Wednesday as investors worried about the economic health of smaller countries in the euro zone.

Oil fell below $77 a barrel at one point after data showed U.S. crude inventories in the United States rose more than expected while refinery utilization rates fell again. For details see: [ID:nSGE612073]

The euro surrendered early gains and fell as investors digested news that the European Commission backed a Greek deficit-cutting plan, as expected. [ID:nN03163610] The news eased some immediate investor worries over fiscal problems in the euro zone but it failed to allay long-term concerns, particularly as Greece is not seen as an isolated case in the region.

"People were looking for the EU plan on Greece and it was more or less what was expected but there will still be problems for some time," said Win Thin, currency strategist at Brown Brothers Harriman in New York. "It's not just Greece, it is Spain and Portugal."

European shares snapped a three-day rally on investor concerns about the euro zone's peripheral countries, with banks falling and miners tracking metal prices lower.[ID:nLDE6122F2]

The FTSEurofirst 300 <.FTEU3> index of leading European shares closed down 0.6 percent at 1,020.99 points.

"The market is very worried. We are stuck in between a rock and a hard place," said Philippe Gijsels, senior equity strategist at Fortis Bank in Brussels.

U.S. stocks fell after disappointing results from Pfizer and transport companies, while slower-than-expected expansion in the services sector also weighed on the market. [ID:nN03145924]

Pfizer Inc fell 3.3 percent to $18.43, leading a broad decline in several healthcare sectors after the world's biggest drug maker said quarterly earnings missed estimates and forecast profits below expectations. [ID:N02107070].

Health insurers dropped, with Cigna Corp down 2.2 and UnitedHealth Group Inc off 2.7 percent. The Morgan Stanley Healthcare Payor Index <.HMO> fell 1.8 percent.

"There are concerns about earnings in healthcare ... and some of the policies that (the Obama administration is) looking at," said Dennis Cajigas, senior market strategist at Lind-Waldock in Chicago.

The Dow Jones industrial average <.DJI> was down 49.05 points, or 0.48 percent, at 10,247.80. The Standard & Poor's 500 Index <.SPX> was down 7.94 points, or 0.72 percent, at 1,095.38. The Nasdaq Composite Index <.IXIC> was down 6.47 points, or 0.30 percent, at 2,183.59.

Portuguese government bonds slid as investors turned to the next perceived weak link in the euro zone after highly indebted Greece won European Commission backing for its fiscal reforms. [ID:nLDE6122GD]

Greek government bonds reversed some of the gains made against German benchmarks following the commission's endorsement of the deficit-cutting plan.

"The market appears to be taking over from the European Commission the role of enforcer of fiscal discipline, and it could prove far more efficient and brutal than the Stability and Growth Pact," said Unicredit chief economist Marco Annunziata.

U.S. Treasuries slipped after encouraging economic data offered a glimmer of hope for a return of job creation, reducing the appeal for low-risk government securities. [ID:nN03162172]

The market's losses were limited, however, by the declines in major U.S. stock indices and renewed worries over sovereign credit risks in Europe.

U.S. private employers cut 22,000 jobs in January, less than the 61,000 jobs lost in December, according to the ADP National Employment Report. [ID:nWEN9595]

The benchmark 10-year U.S. Treasury note was down 10/32 in price to yield 3.68 percent.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.38 percent at 79.314.

The euro was down 0.32 percent at $1.3917. Against the yen, the dollar was up 0.75 percent at 91.06.

U.S. light sweet crude oil fell 25 cents to $76.98 a barrel.

Japan's Nikkei stock average <.N225> edged up 0.3 percent, while Asia Pacific stocks outside Japan as measured by MSCI <.MIAPJ0000PUS> rose 1.9 percent. (Reporting by Nick Olivari and Tom Ryan in New York; Emelia Sithole-Matarise and Joanne Frearson in London; writing by Herbert Lash; Editing by Dan Grebler)

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