Stocks: European worries dominate

by: - December 12, 2011
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NEW YORK (CNNMoney) — U.S. stocks pointed to a lower open Monday as investors remained uncertain about the debt crisis in Europe.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures slid ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

European leaders, including the 17 members of the eurozone, reached a deal for a new intergovernmental treaty Friday to create fiscal unity and resolve the long-running debt crisis once and for all. The plan is expected to be finalized by March but a lot can happen between now and then.

“The agreement last week is a long-term positive, but it really doesn’t solve the immediate problem,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

Cardillo cites Moody’s “renewed call to review European sovereign debt,” as a source of pressure weighing on the markets. Early Monday, the credit ratings agency said Friday’s plan offered “few new measures” and pledged to review the credit ratings of all European Union members at the beginning of the new year.

“Moody’s believes that the system remains prone to further shocks, which would likely lead to selective rating changes,” wrote Moody’s analysts.

Europe debt saga far from over

Without any major U.S. economic reports due out Monday, the euro will remain the main driver, Cardillo says.

Also on Monday, the European Commission, European Central Bank and International Monetary Fund, known as the Troika, will return to Athens to continue discussions with Greece’s new government about that country’s bailout needs and austerity plans.

U.S. stocks rallied Friday, after the European debt plan was announced.

World markets: European stocks were lower in midday trading. Britain’s FTSE 100 (UKX) slipped 0.8%, the DAX (DAX) in Germany dropped 2.1% and France’s CAC 40 (CAC40) fell 1.4%.

Asian markets ended mixed. The Shanghai Composite (SHCOMP) shed 1%, while the Hang Seng (HSI) in Hong Kong ticked up 0.1% and Japan’s Nikkei (N225) rose 1.4%.

Companies: Financial stocks will once again be in focus as the biggest reactors to European debt concerns. Shares of Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) were all down between 0.5% and 1% in premarket trading.

Currencies and commodities: The dollar gained strength against the euro and British pound, but fell versus the Japanese yen.

Oil for January delivery slipped $1.23 to $98.18 a barrel.

Gold futures for February delivery fell $30.40 to $1,686.40 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury was little changed, with the yield holding steady at 2.05% from late Friday.

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