Greek fears halt share rally

Fears that Greece might not accept the terms of a proposed new bailout deal brought a rally in global shares and the euro to a halt today, undermining the positive effect of better global economic data.

US stocks edged lower, tracking European equities, while a gauge of global stocks fell for the first session in five. Still, the declines were not enough to derail an uptrend of five consecutive weeks of gains on both the US benchmark S&P 500 index and global stocks measured by MSCI.

The Greek debt crisis remained a concern to markets as political leaders had not agreed to accept deeply unpopular public wage cuts and other measures to qualify for a new bailout from the European Union and International Monetary Fund. Greece needs the cash by March to meet big debt repayments and avoid an unruly default.

The slow progress to sort out Greece's cash problems has angered the country's European partners and undermined investor confidence across all markets.

"It's inevitable the risk profile that Greece represents is definitely going to cool the market tone. There is absolutely no way around that," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"That lack of clarity, the protracted nature of this crisis and the fact that it simply will not go away, it's a bit unnerving to people who have seen the (US stock) market tack on some very nice early-year gains, and it forces people to want to be a little cautious."

In morning trading in New York, the Dow Jones industrial average was down 46.73 points, or 0.36 per cent, at 12,815.50. The Standard & Poor's 500 Index was down 4.55 points, or 0.34 per cent, at 1,340.35. The Nasdaq Composite Index was down 6.69 points, or 0.23 per cent, at 2,898.97.

The FTSEurofirst 300 index of top European shares was down 0.2 per cent. Global stocks measured by MSCI also slipped 0.2 per cent.

The euro was off 0.4 per cent at $1.3060, having touched a low of $1.3026, according to Reuters data.

However, the underlining sentiment in markets remained positive due to strong economic data in January from the United States, China and Germany. An easier monetary stance from the world's major central banks that appears set to continue at key meetings this week also supports investor sentiment.

Data on German industrial goods orders, released today, extended the run of good data. A better-than-expected 1.7 per cent rise for December was propelled by demand from outside the euro zone, which more than made up for a drop in orders from within the currency region.

US Treasuries prices edged lower as follow-through selling after Friday's better-than-expected jobs report offset the safe-haven appeal of US debt.

The benchmark 10-year US Treasury note was down 2/32, the yield at 1.9311 per cent.

Reuters