Home > World News > Turmoil on European bond markets weighs on Wall Street

Turmoil on European bond markets weighs on Wall Street

New York – Stocks dropped on Wall Street Wednesday as fears about European debt took on new urgency.

Fears that the 17-member eurozone faced a recession in the coming months grew amid renewed bond market turmoil and the release of a key survey pointing to a contraction in growth and data showing a plunge in factory orders.

The European Central Bank stepped in to the market to buy government bonds after the yield on ten-year bonds in Italy and Spain inched up back towards the key 7-per-cent mark. This is the point where economists believe borrowing costs are no longer sustainable.

Meanwhile, sales for a German 10-year bund also fell short by about 35 per cent, raising the prospects of further turmoil on the bond market of the eurozone’s cash-strapped states as the debt crisis now risks spreading to Germany.

The blue-chip Dow Jones Industrial Average lost 236.17 points, or 2.05 per cent, to 11,257.55. The broader Standard & Poor’s 500 Index shed 26.25 points, or 2.21 per cent, to 1,161.79. The technology-heavy Nasdaq Composite Index slipped 61.2 points, or 2.43 per cent, to 2,460.08.

The US currency was up against the euro at 74.93 cents from 74.01 euro cents on Tuesday. The dollar edged up against the Japanese currency to 77.28 yen from 76.99 yen.

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