GLOBAL MARKETS-Euro, global stocks fall on fiscal plan anxiety

NEW YORK (Dec 12): Global stocks and the euro slid on Monday as
investors soured on a European Union plan adopted last week to enhance
fiscal discipline in the euro zone in the hopes of quelling a
two-year-old debt crisis.

Initial market enthusiasm over the plan on Friday faded due to legal
uncertainty surrounding the pact and the absence of a sufficiently
strong financial backstop for the euro zone single currency.

Ratings agency Standard & Poor's put more pressure on investor
sentiment after its chief economist said time was running out for the
euro zone to resolve its debt problems and that it might need another
financial shock to get it moving.

Fitch Ratings warned that the meeting of EU leaders last week did
little to ease pressure on the region's sovereign debt crisis and the
rating agency predicted a "significant economic downturn" across the
region.

"The measures were quite positive but the market was looking for a
magic bullet and that hasn't happened," said Erik Esselink, fund manager
at Invesco Perpetual, which has 5 billion euros under management.

The euro fell 1.5 percent to $1.3189 and borrowing costs for Italy
and Spain rose as the EU plan failed to restore market confidence.

Italian 10-year yields threatened to hit the 7 percent level, seen as
unsustainable, but peaked at more than 6.8 percent. European Central
Bank intervention helped yields fall back to 6.60 percent -- still 20
basis points higher on the day.

Investors rushed to the safety of U.S. government debt. The price of
the benchmark 10-year U.S. Treasury note was up 12/32, pushing its
yield down to 2.02 percent.

"The pact that was agreed upon by European officials still has a long
way to go in order to come to fruition, and that leaves the market open
to riot," said Mark Luschini, chief investment strategist at Janney
Montgomery Scott in Philadelphia.

Global stocks as measured by MSCI's all-country world index fell 1.6
percent. The FTSEurofirst 300 index of top regional shares in Europe
closed down 1.9 percent at 967.49.

Wall Street pared some losses after falling almost 2 percent in a
broad decline, with all l0 Standard & Poor's industry groups in
negative territory.

The Dow Jones industrial average closed down 162.87 points, or 1.34
percent, at 12,021.39. The Standard & Poor's 500 Index was down
18.72 points, or 1.49 percent, at 1,236.47. The Nasdaq Composite Index
was down 34.59 points, or 1.31 percent, at 2,612.26

Brent crude slipped to almost $107 per barrel on concerns the
European debt crisis will slow economic growth and result in reduced oil
demand.

Brent crude for January delivery fell $1.36 to settle at $107.26 a barrel.

U.S. January crude fell $1.64 to settle at $97.77 a barrel.

"The austerity measures will have a profoundly negative impact on
economic growth and will make 2012 a very challenging year in economic
terms," said Philippe Gijsels, head of research at BNP Paribas Fortis
Global Markets.

U.S. gold futures for February delivery settled down $48.60 at $1,668.20 an ounce. - Reuters