Major global stock indexes fell and the euro weakened against the dollar on Friday on renewed worries about Greece and after mixed US economic data stirred uncertainty over the prospect of near-term stimulus from the Federal Reserve.
Concern over how Europe will attempt to lower Spain's borrowing costs added to jitters in financial markets.
Spain's deputy prime minister said on Friday his government is not in talks with the euro zone over financial assistance to lower those costs.
Germany, as well as France, want Greece to stay in the euro zone but Athens must meet its commitments, Chancellor Angela Merkel said after meeting Greek Prime Minister Antonis Samaras.
“If you are a bull and want central banks to absorb debt issues you want to hear (Merkel) sound acquiescing,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
“That's not where she was starting the conversation from.”
Shares held on to losses after data showed new orders for long-lasting US manufactured goods surged in July, but a second straight month of declines in a gauge of planned business spending pointed to a slowing growth trend in the factory sector.
The mixed signals added to uncertainty on whether the Fed will soon act to help the economy. Hopes for action grew after minutes from the Fed's latest meeting, released on Wednesday, showed policymakers might deliver another round of stimulus “fairly soon” unless the economy improves considerably.
“There is some volatility at the core, but the overall feeling is that the economy is still trending in the right direction,” said Ravi Bharadwaj, market analyst at Western Union Business Solutions in Washington.
“For now, based on the string of reports we've had so far, there doesn't seem to be a need of further quantitative easing from the Fed.”
The MSCI global stock index slipped 0.7 percent to 322.47 points.
On Wall Street, the Dow Jones industrial average was down 15.16 points, or 0.12 percent, at 13,042.30. The Standard & Poor's 500 Index was down 2.45 points, or 0.17 percent, at 1,399.63. The Nasdaq Composite Index was down 7.03 points, or 0.23 percent, at 3,046.37.
European shares fell 0.4 percent to 1085.23 points.
Federal Reserve Chairman Ben Bernanke and other central bank leaders meet in Jackson Hole, Wyoming, next week for an annual get-together that could shed light on the outlook for monetary policies.
“We are in a vacuum, policy-wise, ahead of the Jackson Hole meeting and the (European Central Bank) meeting on September 6 so we are in a wait and see mode,” said Saxo Bank chief economist Steen Jakobsen.
The euro fell 0.5 percent to $1.2500, pulling away from its recent seven-week high. The dollar rose 0.1 percent to 78.54 yen.
Oil prices fell below $115 per barrel but a host of supply-side worries kept losses in check. Brent crude was down 35 cents at $114.66 a barrel. US crude rose 17 cents to $96.44.
Benchmark U.S. 10-year Treasury notes traded 8/32 higher with a yield of 1.6472 percent.
German Bund futures rose as high as 144.13, up 63 ticks on the day. - Reuters