Stocks fall early as hope dims for Europe deal

0
5

U.S. stocks fell early Wednesday as differences emerged between European officials struggling to craft a debt-crisis deal ahead of this week’s leadership summit.

The Dow Jones industrial average fell 81 points, or 0.7 percent, to 12,069 in the first half-hour of trading. Heavy equipment maker Caterpillar Inc. fell 1.6 percent, the most among the 30 stocks in the Dow Jones industrial average.

The Standard & Poor’s 500 index fell 11 points, or 0.9 percent, to 1,247. The Nasdaq composite index fell 31, or 1.2 percent, to 2,618.

Traders hope European leaders will agree by Friday to link their budgets more closely. France and Germany have called on them to renegotiate Europe’s founding treaties to enforce greater fiscal discipline.

Hopes for a deal dimmed Wednesday when a German official said the governments appear unlikely to reach a deal this week. If the talks broke down, despairing traders would likely sell stocks quickly.

In Europe, stock indexes were mostly lower and the yields on Spanish and Italian government debt rose. The yield on the benchmark Italian 10-year bond rose a quarter of a percentage point to 5.99 percent. Germany’s DAX fell 1.6 percent, France’s CAC-40 fell 1.4 percent.

Citigroup Inc. fell 3 percent. The bank’s CEO, Vikram Pandit, said Tuesday that the bank would cut 4,500 jobs and take a $400 million charge for severance and other related charges. The cuts would reduce Citi’s payrolls by about 1.5 percent.

Earlier Wednesday, U.S. Treasury Secretary Timothy Geithner said he is very encouraged by Europe’s progress in hashing out a plan to restore long-term confidence in the euro. It is threatened by the heavy debts racked up by smaller nations that share the currency. Nations with stronger economies are being forced to bail out nations such as Greece and Portugal, and restore investor confidence in larger nations such as Italy.

Geithner’s comments to reporters followed a meeting with French Finance Minister Francois Baroin on the second day of his whirlwind trip through Europe.