US stocks decline on European pessimism

United States stocks fell, following a two-day advance for the Standard & Poors 500 Index, amid growing pessimism that European leaders will reach agreement on measures to ease the debt crisis at a summit this week. Bloomberg News reported on Wednesday that United Technologies Corporation and Caterpillar Incorporated led losses in the Dow Jones Industrial Average, dropping by more than 1.5 per cent. The S&P 500 dropped by 0.5 per cent to 1,252.57 at 11:25am New York time. The benchmark gauge for American equities rose by 1.1 per cent over the previous two sessions. The Dow slipped 16.96 points, or 0.1 per cent, to 12,133.17. "Markets reflect that it is pretty high stakes in Europe," Charles Reinhard, who helps oversee about $1.7tn as deputy chief investment officer at Morgan Stanley Smith Barney LLC in New York, said in a telephone interview. "It is important that Europe is able to integrate fiscal policy, shore up the banks and that monetary policy eases." Stock futures pared gains after a German government official said the country had rejected proposals to combine the current and permanent euro-area rescue funds.It was already decided that the permanent European Stability Mechanism would take over from the current rescue fund at an appointed time, a German official said on condition of anonymity. Germany official said the country will oppose any attempt to change that. The European Central Bank may announce a range of measures tomorrow to stimulate bank lending, three euro-area officials with knowledge of policy makers deliberations, said. Options include loosening collateral criteria so that institutions have more access to cheap ECB cash and offering them longer-term loans, according to the officials, who spoke on condition of anonymity. German Chancellor, Ms. Angela Merkel, and French President, Mr. Nicolas Sarkozy, will argue for rewriting European Union treaties to tighten control of national budgets at the meeting in Brussels tomorrow and on December 9. "Its difficult to get a bottom line outcome on the European situation," the Director of Equity Strategy at Minneapolis-based RBC Wealth Management, Mr. Philip Dow, said, adding, "Macro concerns are driving the market. It is a challenging environment to manage money."
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