* Euro drops for a sixth consecutive trading session
* U.S. stocks fall at open, 80 points, on Greece
* Greek/German bond yield spread hits 600 bps
(Recasts with U.S. market open, adds New York dateline)
By Jennifer Ablan and Jeremy Gaunt
NEW YORK/LONDON, April 22 (Reuters) - The euro fell for a
sixth consecutive session on Thursday after the European Union
said Greece's budget deficit was worse than previously thought,
while U.S. stocks fell in sympathy with world equity markets.
The EU's official statistics agency said the Greek budget
deficit last year was 13.6 percent of gross domestic product,
and not the 12.7 percent estimated by the Greek government.
The new uncertainty on Greece's fiscal liabilities
intensified fears about the country's ability to avoid default,
rattling the European currency and world markets. For more
details please click on []
The figures pushed the euro <EUR=> to a session low of
$1.3356, while the premium investors demand to buy Greek
government bonds rather than euro zone benchmark Bunds rose to
600 basis points, matching levels last seen in February 1998.
"The data highlights the fiscal issues and contagion
issues," said Adarsh Sinha, currency strategist at Barclays
Capital in London.
At 10 a.m. EST, the Dow Jones industrial average <> was
down 87.97 points, or 0.79 percent, at 11,036.95. while the
Standard & Poor's 500 Index <.SPX> was down 11.88 points, or
0.99 percent, at 1,194.06. The Nasdaq Composite Index <>
was down 26.44 points, or 1.06 percent, at 2,478.17.
MSCI's all-country world equity index <.MIWD00000PUS> was
down 1.17 percent and the pan-European FTSEurofirst 300
<> also was down more than 1.20 percent.
Greece has been struggling to persuade markets it can slash
its budget deficit and avoid default. It needs to raise 10
billion euros next month with an 8.5 billion euro bond falling
due on May 19.
Talks to hammer out details of a potential European and
International Monetary Fund aid deal began on Wednesday but
investors were still dumping Greek assets with resistance
against the package heated both at home and abroad.
GREEK SPREADS HITS 600 BPS
The premium investors demand to buy Greek government bonds
rather than euro zone benchmark Bunds rose to a new 12-year
high on Thursday, as markets grew increasingly impatient for a
resolution to Greece's debt crisis.
The Greek/German 10-year bond yield <GR10YT=TWEB>
<DE10YT=TWEB> spread rose to 600 basis points, matching levels
last seen in February 1998.
"There seems little hope of a significant fall in yields
before the markets see cash in Greek hands. The only way Greece
stands a chance of refinancing the 8bn or so of debt that
matures in mid-May without paying an exorbitant interest rate
will be to put the bailout package in motion as soon as
possible," said Ben May, European economist at Capital
Economics, in a note to clients.
Adding to the sour sentiment in U.S. stocks, technology
shares tumbled on disappointing forecasts at Nokia <NOK1V.HE>
<NOK.N>, EBay Inc. <EBAY.O> and Qualcomm Inc. <QCOM.O>.
Nokia's quarterly earnings report disappointed investors
after it cut its profit outlook for its key phone unit. Its
U.S.-listed shares tumbled roughly 15 percent to $12.71.
Chipmaker Qualcomm on Wednesday gave a weak forecast for
the current quarter and full year, sending its stock down more
than 6 percent on Thursday. []
Shares of Internet auctioneer and retailer EBay also
dropped more than 8 percent after it made a forecast for the
rest of the year that fell short of Wall Street expectations.
[]
Against the backdrop of Greece and disappointing forecasts
from those companies, U.S. Treasury debt prices were higher.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
6/32, with the yield at 3.72 percent, while the 2-year U.S.
Treasury note <US2YT=RR> was up 1/32, with the yield at 0.98
percent. The 30-year U.S. Treasury bond <US30YT=RR> was up
12/32, with the yield at 4.60 percent.
In currencies, the dollar was up against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
up 0.64 percent at 81.677 from a previous session close of
81.161.
The euro <EUR=> was down 1.14 percent at $1.3283 from a
previous session close of $1.3436. Against the Japanese yen,
the dollar <JPY=> was down 0.19 percent at 92.95 from a
previous session close of 93.130.
In energy and commodities prices, U.S. light sweet crude oil
<CLc1> fell $1.57, or 1.88 percent, to $82.11 per barrel, while
spot gold prices <XAU=> fell $11.35, or 0.99 percent, to
$1133.90. The Reuters/Jefferies CRB Index <.CRB> was down 2.48
points, or 0.9 percent, at 274.27.
(Additional reporting by Simon Falush and Tamawa Desai)
