Stocks mixed on eurozone uncertainty

Friday 21.10 BST. Global equity markets wrapped up the last session of a volatile week on negative territory as investors remained wary amid uncertainties over the outlook for the eurozone and its impact on the global economy.

The mood on Friday was mixed, as some investors saw value in selected commodities, but caution dominated.

The FTSE All-World equity index, which has vacillated sharply on every eurozone-linked sentiment shift - up 1.8 per cent over Monday and Tuesday, down 1.3 per cent on Wednesday - ended the session 0.2 per cent lower. The benchmark has lost 8.6 per cent so far in May and hovers near its lowest level since the start of the year.

Chances of further financial system and economic turmoil from a possible Greek euro exit and waning growth in China - continued to determine investor strategies, leading to tentative and jumbled trading.

But sentiment took a turn for the worse mid-session after reports that Spain's Catalonia region had appealed for Madrid's help to refinance it's debt, highlighting the budget difficulties facing Europe's fifth-biggest economy.

The euro slid on the news. After rallying to above $1.26, it traded 0.2 per cent lower to $1.2511, having at one point hit a fresh 22-month trough of $1.2497. Polls showing the anti-bailout left gaining ground ahead of Greece's June election also added pressure on the single currency.

Further indications that investors remained nervous about the eurozone's debt difficulties weighed on Spanish bonds. Madrid's 10-year note yield rose 15 basis points at 6.31 per cent, an elevated level deemed unsustainable for the country's financing needs.

European equities relinquished a big chunk of early session gains. The FTSE Eurofirst 300 was up just 0.2 per cent as miners falter on worries about medium-term demand for industrial commodities.

This came even as copper added 0.7 per cent to $3.46 a pound. The red metal has shed nearly 40 cents since the start of the month. US-traded crude oil rose 0.2 per cent to $90.84 after recent heavy falls.

On Wall Street, the benchmark S&P 500 traded slightly lower, down 0.2 per cent, despite news that US consumer confidence in May hit its highest level since October 2007.

US markets will be closed on Monday for the Memorial day holiday, with investors reluctant to take in new positions ahead of the long weekend.

The relapse in growth-focused assets resulted in money flowing back into perceived havens.

The dollar index, for example, is up 0.1 per cent at 82.40, its highest since September 2010. The weaker dollar did not disturb gold, however, with bullion advancing 0.3 per cent to $1,562 a troy ounce.

Meanwhile, "core" government bond yields flirt with record lows. Thursday's reports on US weekly jobless numbers and durable goods data did little to dispel concerns that the economic recovery is anaemic and this is also helping to suppress US 10-year yields, down 4 basis points to 1.74 per cent.

The US Treasury concluded debt auctions this week with the sale of $29bn in seven-year notes on Thursday. The securities were sold with a 1.2 per cent yield, the lowest on record for a Treasury auction.

German 10-year government bond yields are down 2 basis points to 1.38 per cent, only a few basis points above the previous session's record low.

In Asia, the mood remained resolutely cautious, with the FTSE Asia Pacific index sliding 0.2 per cent to its lowest mark since just before Christmas.

A more stable yen provided some support for Japanese exporters, while property shares also initially did well after the Nikkei newspaper reported that Goldman Sachs would start investing in Japanese real estate for the first time since 2008.

But the Nikkei 225 could only manage an advance of 0.2 per cent. This meant Japan's equity barometer was down 0.4 per cent for the week, its eighth consecutive weekly retreat, the worst such run in 20 years, according to Reuters.

A mild snapback in previously battered commodity prices initially helped the resource-rich Australian stock market, but it could not hold, and the S&P/ASX 200 finished down 0.7 per cent, its lowest close since November.

In China, concerns about the slowing economy weighed on sentiment, though environment-related shares rallied on Beijing's plans to spend Rmb170bn on technology related to energy saving, emissions reduction and renewable energy.

Still, the Shanghai Composite was down 0.7 per cent, though Hong Kong's Hang Seng rose 0.3 per cent.

Additional reporting by Jamie Chisholm in London

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