Global stocks, euro near seven-week low

German government bond yields hit their highest in nearly a month on Thursday and world stocks held near seven-week lows.A weak debt sale the previous day fanned fears the euro zone debt crisis may finally begin to threaten its biggest economy.The euro was also near seven-week lows as markets eyed a meeting of leaders from France, Germany and Italy for any signs of cracks in Berlins resistance to stronger action to end the two-year old crisis.Repercussions from the auctionwhere bids fell well short of the 6 billion euros on offerextended into a second day, with Bund futures falling 115 ticks on the day to 134.66, the lowest since October 31.Ten-year German government bond yields rose as high as 2.12 per cent in early trade.Investors were reluctant to buy riskier assets even after eight consecutive sessions of losses for world stocks which should make prices attractive.A lot of people are still cautious with regards to the uptick and it could prove rather temporary as the backdrop is still difficult, Keith Bowman, equity analyst at Hargreaves Lansdown, said.Events in Europe are still dominating and the German bond auction yesterday just added another level of caution.MSCI world equity index was steady on the day. The index has fallen 15 per cent since January.European stocks were also broadly unchanged on the day while emerging stocks rose 0.1 per cent.US crude oil rose half a per cent to 96.60 dollars a barrel.The euro was up 0.1 per cent at 1.3363 dollars, having fallen as low as 1.3318 dollars on Wednesday.If Germany has to pay higher costs for its borrowing, its obvious it cannot help the entire euro zone.If German bond yields keep rising, that could even be a trigger for break-up of the euro, said Makoto Noji, senior strategist at SMBC Nikko Securities.
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