Markets Decline as Angela Merkel Says No Leeway for Greece

Monday, 18 Jun 2012 12:07 PM

 

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U.S. stocks declined after German Chancellor Angela Merkel said the new Greek government should not be granted additional leeway on the terms of its bailout and Spanish bond yields advanced to a euro-era record.

Energy companies in the Standard & Poor’s 500 Index had the biggest decline among 10 industries as oil slumped amid a stronger U.S. dollar. Hewlett-Packard Co. and Alcoa Inc. retreated at least 2 percent to pace losses among the largest companies. A measure of homebuilders in S&P indexes increased 2.1 percent as confidence in the industry climbed in June to a five-year high. Facebook Inc. rallied 3.1 percent in the one- month anniversary of its initial public offering.

The S&P 500 fell 0.2 percent to 1,340.79 as of 11:40 a.m. in New York, after rising 0.3 percent. The Dow Jones Industrial Average lost 36.51 points, or 0.3 percent, to 12,730.66.

“We managed not drive off the cliff in Greece, but we still got two flat tires,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “There’s some heavy lifting yet to go. The challenges in Spain are very much in front of us. In the U.S., the housing market continues its slow recovery. There’s not a lot of conviction out there.”

Spain’s 10-year bond yields rose above 7 percent, sparking concern that the nation will need external funding. Greek election winner Antonis Samaras raced to build a coalition to keep bailout aid flowing after a key rival, anti-bailout party Syriza, rejected his offer to join a government.

“The important thing is that the new government sticks with the commitments that have been made,” Merkel told reporters today in the Mexican resort of Los Cabos before a Group of 20 summit. “There can be no loosening on the reform steps.”

 

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