GLOBAL MARKETS-Tech stocks sink Wall Street; U.S. bonds rally

Reuters - UK Focus

* Nasdaq losses top 2 percent; Dow, S&P down more than 1percent

* U.S. jobless claims report unexpectedly strong

* Dollar gets little lift from jobs data

* Greece makes successful return to bond markets (Adds widening Wall Street declines, price updates)

By Michael Connor

NEW YORK (Frankfurt: HX6.F - news) , April 10 (Reuters) - U.S. technology stocksslumped on Thursday, resuming recent weakness in shares whichhad previously led U.S. stocks higher for more than a year,while Greece's much-heralded return to the bond market buoyedeuro zone debt.

The yield on the benchmark 10-year U.S. Treasury note fellto its lowest since the beginning of March as investors shiftedout of equities into safe-haven government debt.

Technology and biotech shares led the way lower, asinvestors continue to question whether high-flying momentumstocks such as TripAdvisor (NasdaqGS: TRIP - news) are overvalued. The Nasdaqindex, which is heavily composed of technology companyshares, fell nearly 3 percent.

European equity markets, which started the day stronger,fell in tandem with Wall Street.

The equity market dropped even after the Labor Departmentreported that U.S. weekly jobless claims fell to a seven-yearlow, indicating ongoing recovery in the labor market and theeconomy.

"The rotation is out of some of the higher-growth,higher-momentum areas of the market, and until we get earningsvisibility, we could see protracted weakness," said Eric Teal,chief investment officer at First Citizens Bancshares Inc (NasdaqGS: FCNCA - news) inRaleigh, North Carolina, which manages $3.5 billion.

On Wednesday, U.S. stocks bounced after dovish commentaryfrom the Federal Reserve's minutes from its March meeting. Thathelped shares in Asia rally overnight and bolstered Europeanequities for a time.

Wall Street's Dow Jones industrial average fell 178points or 1.08 percent, to 16,260.28, the S&P 500 lost25.82 points or 1.37 percent, to 1,846.46 and the NasdaqComposite dropped 101.2 points or 2.4 percent, to4,083.20.

The S&P technology sector fell 2.1 percent, whilethe Nasdaq biotechnology index plunged 5.4 percent.

Greece staged a triumphant return to the bond market justtwo years after its default placed it at the center of the eurozone debt crisis.

Greece drew solid demand at its five-year bond sale, whichaimed to raise three billion euros and offered a yield of 4.95percent, beating Athens' 5 percent target. It had been expectedto draw in U.S. investors including hedge funds.

Greece's deputy prime minister, Evangelos Venizelos, saidthe sale was at least eight times oversubscribed. Investorslooked to the deal as further evidence that the euro zone'seconomic recovery is gathering pace.

"It's not a particularly cheap deal for them, but they areon the right track and it shows the debt crisis has easedsignificantly," said Commerzbank (Xetra: CBK100 - news) strategist Michael Leister.

The global MSCI All-Country World index wasdown 0.7 percent. The FTSEurofirst 300 index of leadingEuropean companies lost 0.5 percent, shedding earlier gains.

European shares felt the sting of weak economic data, withItaly reporting softer-than-expected industrial output while adiscounted share placement by Iberdrola (Other OTC: IBDRY - news) triggered aselloff in Spanish utilities.

U.S. Treasuries rallied on the weakness in stocks. Thebenchmark 10-year Treasury note rose 17/32 to dropits yield to 2.623 percent, while the 30-year bond was little changed at 3.511 percent.

The Federal Reserve on Thursday bought $3.223 billion ofTreasuries maturing June 2018 through December 2018 as part ofits economic stimulus program.

Initial U.S. jobless claims declined by 32,000 to aseasonally adjusted 300,000 for the week ended April 5.

"It's collaborating with the other signals we have beenseeing, which is the jobs market is slowly improving," said RyanSweet, a senior economist at Moody's Analytics in West Chester,Pennsylvania.

The Fed minutes took a toll on the dollar on Thursday,sending the greenback to lows against the yen and the Swissfranc not seen in weeks, as investors who had positioned for agradual tightening in monetary policy reversed course.

The dollar has fallen versus the yen in four of the lastfive trading days and on Thursday neared a four-week low .Against the Swiss franc, the dollar weakened for a fourthstraight session and stood at a low last seen on March 19.

"The minutes were laced with dovish undertones," said ScottSmith, senior FX trader and market analyst, at Cambridge (SES: E1:J91U.SI - news)Mercantile Group in Calgary, sending "market participants into a'risk-on' buying frenzy."

The dollar was down 0.3 percent versus the yen at101.64 yen, having fallen to 101.39, its lowest since March 19.The dollar slipped against the Swiss franc to 0.8768franc, its lowest in three weeks.

A drop in China's exports stoked concerns about demand inthe world's second-biggest economy and pushed the price of oildown toward $107 a barrel. OPEC also lowered its 2014 forecastfor oil demand.

Brent crude fell 55 cents to $107.43 a barrel, aftergaining $2.16 over the previous two days.

Gold hit a 2-1/2-week high as the dollar dropped. Spot gold hit its highest since March 24 at $1,324.40 an ouncebefore easing to $1320.20, a gain for the day of 0.55 percent. (Reporting by Michael Connor in New York; Additional reportingby Sudip Kar-Gupta in London and Gertrude Chavez-Dreyfuss, RyanVlastelica, Chuck Mikolajczak and Richard Leong in New York;Editing by Leslie Adler and James Dalgleish)

View Comments (0)