Stock sell-off slows after Tuesday's rout; euro hits new one-year low
European stock markets ended broadly lower Wednesday for a second day, but the losses were significantly smaller than in Tuesday’s rout.
The euro also continued to sink, but at a slower pace. The euro was trading at a new 12-month low of $1.286 in New York at around 11:05 a.m. PDT, down from $1.30 on Tuesday and $1.32 on Monday.
Wall Street also has been trying to stabilize. The Dow Jones industrial average was off 53 points, or 0.5%, to 10,873 at about 11:05 a.m. PDT, after diving 225 points on Tuesday.
Stock market selling eased even though fear that Portugal and Spain could be frozen out of credit markets -- and forced to turn to the rest of Europe for bailouts, as Greece did -- failed to recede, at least as measured by market yields on Portuguese and Spanish bonds.
Moody’s Investors Service warned that it might cut Portugal’s bond rating because of the “recent deterioration” in the country’s finances and the risk that Portugal could face higher borrowing costs “for some time to come.”
The yield on two-year Portuguese government bonds jumped to 5.51% from 4.55% on Tuesday and 3.66% on Monday. Spain’s two-year government bond yield rose to 2.61% from 2.19% on Tuesday and 1.97% on Monday.
Axel Weber, a key council member of the European Central Bank, tried to rally German lawmakers to approve Germany’s share of the Greek bailout, warning that “there is a threat of grave contagion effects for other member states in the monetary union” from the crisis.
Still, stock investors’ rush for the exits slowed. The Spanish market slumped 2.3%, less than half the 5.4% loss on Tuesday. Portuguese stocks dropped 1.4% after losing 3.8% on Tuesday. The German market was off 0.8% after sliding 2.6% the day before.
In Greece, where riots raged against the austerity measures that would be forced on the country as part of its $146-billion bailout from the rest of Europe and the International Monetary Fund, the stock market fell 3.9% after plummeting 6.7% on Tuesday.
Greece’s market now has lost 43% of its value since mid-October, although the main market index, at 1,662 on Wednesday, still was above its decade low of 1,469 reached in March 2009.
-- Tom Petruno
Photo: An Athens crowd on Wednesday protesting Greece's austerity plans. Credit: Dimitar Dilkoff / AFP/ Getty Images