US, EU Stocks Fall for Fourth Day on Economy Concerns

Wednesday, June 17, 2009

European stocks fell for a fourth day, the longest streak since the rebound began in March, on concern the global economy will be slow to recover from the recession.

The Dow Jones Stoxx 600 Index of European shares slid 1.2 percent at 12:22 p.m. in London after a three-month, 36 percent rally that drove price-earnings valuations to the highest levels in five years. The Dollar Index was little changed after falling as much as 0.5 percent earlier as futures traders pared bets that the Federal Reserve will raise its target interest rate by year-end. The pound dropped as U.K. unemployment climbed to the highest since 1998.

While U.S. President Barack Obama said “you’re starting to see the engines of the economy turn,” in an interview with Bloomberg News, he also said “it’s going to take a long time” for a full recovery. The jobless rate will continue to climb from its current 25-year high of 9.4 percent to 10 percent as employers balk at taking on new workers, the president said.

“The turn in risk assets, while still relatively modest, is broad enough and deep enough to suggest that the uptrend has stalled,” Greg Gibbs, a currency strategist in Sydney at Royal Bank of Scotland Group Plc, wrote in a note today. “With valuations no longer compelling, more volatile bond markets and economic data more mixed, the investment community is less hurried to extend further into risk assets.”

(Bloomberg)