US stocks fall on doubts over ECB lending

Stocks and the euro fell on Wednesday as traders cashed in on recent gains and as doubts set in that fresh lending by the European Central Bank to euro zone banks would be used to buy the debt of struggling governments in the region.Reutersreported on Wednesday, that United States stock indices were dragged lower by a slump in shares of Oracle Corporation, which fell by more than 14 per cent after posting results below analysts expectations.Initial optimism about ECB lending to euro zone banks gave way to concerns that the flood of liquidity only highlighted the scale of the pressure European banks are under.The ECB lent $641.08bn to banks to ease the inter-bank credit crunch and tempt banks to buy Italian and Spanish debt.But an Italian industry group said banks wouldnt increase their exposure to sovereign debt even after the ECB offering because European Bank Authority rules discourage it.The ECB efforts should prevent a lot of this liquidity crisis with the banks having to refinance in the early part of 2012, the co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois, Mr. Peter Jankovskis, said.The banks themselves are stronger, but it doesnt necessarily go towards solving the sovereign debt crisis. So, it is a good step but it doesnt solve the whole problem.Italian and Spanish government bond yields rose, snapping an eight-session down trend, while German Bunds edged up in price.In midday equities trading in New York, the Dow Jones industrial average dropped by 64.90 points, or 0.54 per cent, to 12,038.68. The S&P 500 Index fell by 7.46 points, or 0.60 per cent, to 1,233.84.The Nasdaq Composite lost 46.01 points, or 1.77 per cent, to 2,557.72.Global stocks edged 0.3 per cent lower a day after their largest gains since November 30, while the European benchmark FTSEurofirst 300 fell by 0.6 percent.Global equity markets and the euro have traded off European headlines for months as an escalating sovereign debt crisis threatens to take down the blocs economy.As the Christmas and New Year holidays approach, equity markets are expected to become more volatile as volume peters out.
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