* Moody's cuts Greece's debt rating, more are possible
* Euro drops to almost one-year low vs U.S. dollar
* U.S. stocks stage late-day comeback on earnings
(Updates with U.S. markets close)
By Jennifer Ablan
NEW YORK, April 22 (Reuters) - The euro plunged to its
lowest level against the dollar in almost a year on Thursday
and European equities fell after Moody's slashed Greece's
sovereign rating, hours after the European Union said the
country's budget deficit was worse than feared.
U.S. stocks, however, staged a late-day comeback even as
increasing evidence of Greece's deteriorating financial
position eroded risk appetite elsewhere.
Moody's Investors Service downgraded Greece's sovereign
rating one notch to A3, four notches above speculative, or
"junk" status. It cited risks the debt-strapped country may end
up paying much more for its borrowing than previously thought.
Earlier, 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 news intensified fears about Greece's ability to avoid
default. For more details please click on ID:nLDE63L0SF
"Today it is a Greek story. The market seems to be pricing
in some default or restructuring," said Mike Lenhoff, chief
strategist at Brewin Dolphin.
The euro EUR=> plunged for a sixth-straight session to
$1.3260 after the Moody's news and reached its lowest level
since May 2009, according to Reuters data. It was last at
$1.3306, down 0.97 percent on the day. Against the pound, the
euro EURGBP=D4 fell as low as 86.30 pence, its weakest since
late January.
Greece's two-year government bond yield GR2YT=TWEB soared
four percentage points to 12.26 percent as investors bet the
country would need a bailout to avoid a debt restructure or
default.
The cost of insuring Greek government debt against default
hit a record high above 600 basis points. Five-year credit
default swaps on Greek government debt rose to 616 basis
points, making it the most expensive sovereign debt in Europe
to insure against default, according to CMA DataVision.
The news on Greece first weighed on U.S. equities markets,
but earnings dominated the late-day action in stocks.
First-quarter earnings estimates are rising. With 98
Standard & Poor's 500 companies reporting so far, earnings for
the quarter are now seen up 46.4 percent from a year ago. At
the start of the month, earnings were expected to be up 36.6
percent, according to ThomsonReuters data.
At close, the Dow Jones industrial average .DJI> was up
9.37 points, or 0.08 percent, at 11,134.29, while the Standard
& Poor's 500 Index .SPX> was up 2.73 points, or 0.23 percent,
at 1,208.67. The Nasdaq Composite Index .IXIC> was up 14.46
points, or 0.58 percent, at 2,519.07.
The pan-European FTSEurofirst 300 .FTEU3> index of top
shares closed down 1.1 percent at 1,083.88 points, having
earlier been up as much as 1,102.69 points.
European banks extended their slide from the previous
session. Greek banks .FTATBNK slipped 5.4 percent.
MSCI's all-country world equity index .MIWD00000PUS was
down 0.6 percent.
NOKIA OUT SMARTED
While U.S. equities erased losses, technology shares
tumbled on disappointing forecasts at Nokia, eBay Inc. and
Qualcomm Inc..
Nokia cut its profit outlook for its key phone unit as it
faced tough competition in the smartphone market. Its
U.S.-listed shares tumbled more than 13 percent to $12.99 .
Chip maker Qualcomm late on Wednesday gave a weak forecast
for the current quarter and full year, sending its stock down
nearly 8 percent on Thursday. ID:nN20193560
Shares of eBay dropped about 6 percent after its forecast
for the rest of the year fell short of expectations.
ID:nN19208210
U.S. Treasury debt prices declined as investors cut
positions and hedged bets ahead of record new government debt
issuance next week.
U.S. stocks recouped losses.
The benchmark 10-year U.S. Treasury note US10YT=RR was up
8/32, to yield 3.77 percent, while the two-year U.S. Treasury
note US2YT=RR was up 2/32, yielding 1.03 percent. The 30-year
U.S. Treasury bond US30YT=RR was up 9/32, with the yield at
4.64 percent.
In currencies, the dollar was up against a basket of major
trading-partner currencies, with the U.S. Dollar Index .DXY> up
0.58 percent at 81.628 from a previous session close of
81.161.
Against the Japanese yen, the dollar JPY=> was up 0.45
percent at 93.55 from a previous session close of 93.130.
In energy and commodities prices, U.S. light sweet crude
oil CLc1> rose 6 cents, or 0.07 percent, to $83.74 per barrel.
Gold prices fell under pressure from the stronger dollar. Spot
gold XAU=> fell $3.90, or 0.34 percent, to $1,141.40. The
Reuters/Jefferies CRB Index .CRB> was up 0.37 points, or 0.13
percent, at 277.12.
(Additional reporting by Gertrude Chavez-Dreyfuss in New
York and Jeremy Gaunt in London; Editing by Andrew Hay)
