* Court's block of drill moratorium unsettles energy stocks
* Weak U.S. home sales data pares stocks' early gains
* BNP Paribas downgrade hits banks, sinks European shares
* Euro slips for second day, hits record low vs. Swiss franc
(Updates with court ruling on drilling, closing prices)
By Daniel Bases
NEW YORK, June 22 (Reuters) - Uncertainty over
Washington's ban on deepwater oil drilling, coupled with weak
May U.S. housing data, sank stocks and lifted Treasuries on
Tuesday, while a high-profile credit downgrade rattled
Europe's banks.
Fitch's downgrade of French bank BNP Paribas <BNPP.PA> hit
Europe's banking stocks, leading to the end of a nine-day
rally, and pushed prices for gold higher on safe-haven flows.
The euro suffered a broad sell-off as questions over
Europe's banking sector were brought back into focus. The
dollar, however, was mixed, although it did manage to rise
against a basket of its major trading-partner currencies.
China's weekend announcement to emphasize a flexible
currency rather than the de facto peg to the U.S. dollar
appeared to have fully dissipated as investors acknowledge
this would not lead to a sharp appreciation of the yuan.
A U.S. judge blocked the Obama administration's six-month
ban on deepwater oil drilling, complicating efforts to improve
safety of offshore operations after the worst spill in U.S.
history. []
Oil companies opposed the moratorium, but energy-related
shares fell as the decision remains in doubt after a vow from
the White House to appeal the ruling.
Cabot Oil & Gas Corp <COG.N> shares dropped 7.63 percent
to $33.18. The S&P energy sector index<.GSPE> fell 2.70
percent.
"The notion that the regulatory environment is changing,
coordinated with a tougher economic outlook for consumption,
would suggest (energy) stocks stay under pressure," said Joe
Battipaglia, market strategist at Stifel Nicolaus in Yardley,
Pennsylvania.
At the close, the Dow Jones industrial average <> fell
148.89 points, or 1.43 percent, to 10,293.52. The Standard &
Poor's 500 Index <.SPX> lost 17.89 points, or 1.61 percent, to
finish at 1,095.31. The Nasdaq Composite Index <> dropped
27.29 points, or 1.19 percent, to end at 2,261.80.
Technology shares, including a 1.36 percent rise in shares
of Apple Inc <AAPL.O> to $273.85 after reporting 3 million
iPad tablet computer sales in 80 days, were not enough to keep
the Nasdaq in positive territory. For details see
[]
SLOWDOWN ON THE HOME FRONT
Sales of previously owned U.S. homes fell 2.2 percent
month over month in May, well below expectations for a rise of
5.5 percent. Analysts said the data bodes ill for the months
ahead, now that a key federal tax credit for home buyers has
expired.
"It was generally expected that sales would be up, given
earlier contract signings because of the tax credit, so it is
a little surprising," said Paul Kasriel, senior vice president
at Northern Trust in Chicago.
"It's going to be a two-step forward, one-step backward
housing recovery."
MSCI's all-country world index <.MIWD00000PUS> fell 1.34
percent, its first loss since June 7.
European shares lost ground with the FTSEurofirst 300
<> falling 0.43 percent to 1,050.79, breaking a
nine-session win streak.
After Fitch's move on BNP Paribas sent its shares down
1.92 percent, the entire sector weakened, with the STOXX
Europe 600 banks index <.SX7P> off 0.79 percent.
"Now everybody thinks that BNP is one of the most solid
banks, so the heat is more on SocGen and Credit Agricole, and
the latter gave a grim update on its exposure to Greece
today," IG analyst Philippe De Vandiere said.
Credit Agricole <CAGR.PA> warned of worse-than-expected
losses at its Greek unit Emporiki and said it would take a big
write-down. []
Earlier, Japan's Nikkei <> slid 1.2 percent to close
at 10,112.89, a day after bouncing to a one-month high.
EURO HURT BY BANK WORRIES
Funding concerns of European banks led to a second day of
losses for the euro against the greenback. The euro came off
its lows, but still lost 0.35 percent to $1.2263 <EUR=>.
The euro barely reacted to the German Ifo business climate
index, which hit a two-year peak in June, while the
expectations index fell. []
The euro fell to an all-time low of 1.3590 Swiss francs
<EURCHF=> after the Swiss central bank's vice chairman said
the bank would not intervene in markets for now.
[]
The dollar hit 90.45 yen, down 0.45 percent <JPY=>.
British Finance Minister George Osborne unveiled spending
cuts and tax increases in the tightest budget in a generation.
He cut growth forecasts only slightly, but slashed borrowing
projections more than expected. []
The pound, however, erased earlier losses against the
greenback to rise 0.40 percent to $1.4806 <GBP=>.
In the credit markets, benchmark 10-year U.S. Treasuries
rose 22/32 of a point in price, pushing the yield down to
3.170 percent <US10YT=RR>.
Europe's 10-year Bund yield <DE10YT=TWEB> dropped 5.9
basis points at 2.691 percent.
A barrel of U.S. light sweet crude oil <CLc1> settled at
$77.21, down 61 cents or 0.78 percent.
Spot gold <XAU=> rose $8.40, or 0.68 percent, to $1,240 an
ounce.
(Additional reporting by Gertrude Chavez-Dreyfuss, Nick
Olivari and Robert Gibbons in New York; George Matlock, Jeremy
Gaunt, Naomi Tajitsu, and Atul Prakash in London; Umesh Desai
in Hong Kong; Editing by Jan Paschal)
