Sept. 9, 2011 (Bloomberg) -- Stocks sank, while the euro slid to a ten-year low versus the yen and a six-month low against the dollar, as concern grew about Greece’s debt crisis. European bank and sovereign credit risk reached all-time highs as 10-year Treasury yields fell to a record.
The MSCI All-Country World Index retreated 2.9 percent at 2:18 p.m. in New York and the Standard & Poor’s 500 Index slipped 2.7 percent, wiping out its weekly gain. The euro sank as much as 2.1 percent to 105.3 yen and lost 1.8 percent to $1.3627. Ten-year Treasury yields slid as low as 1.89 percent. Credit-default swaps signaled a more than 90 percent probability Greece will default. Oil fell 2 percent.
Stocks extended losses as three German officials said Chancellor Angela Merkel’s government is preparing plans to shore up banks in the event that Greece defaults. The European Central Bank said Juergen Stark resigned from the executive board, suggesting policy makers are divided over how to fight the debt crisis. U.S. President Barack Obama called on Congress last night to pass a $447 billion plan to boost employment after jobs growth stalled last month.
“There’s that nagging thought that we can continue to have a downward spiral in Europe,” James Dunigan, chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. The firm oversees $109 billion. “There’s concern of a default, of risk in banks, of a liquidity crisis. In the U.S., even as President Obama made an effort to put that plan together, there’s not a whole lot of confidence that Congress will pass.”
READ MORE: Bloomberg
