Stocks Are Mixed as Investors Weigh Next Move in Europe

Stocks were mixed on Wall Street and in Europe on Friday after the new head of the European Central Bank dashed hopes that he would act to ease the euro debt crisis.

Mario Draghi, the president of the central bank, told a gathering of bankers in Frankfurt that European leaders — who, with the notable exception of Germany, have been calling for the bank to use its printing press to help embattled governments — are themselves the problem, taking too long to implement crisis measures they agreed to months or even years earlier.

“Where is the implementation of these long-standing decisions?” he said. “National economic policies are equally responsible for restoring and maintaining financial stability.”

In New York, the Dow Jones industrial average rose 0.4 percent, and the broader Standard Poor’s 500-stock index was up 0.3 percent in morning trading. The technology-heavy Nasdaq composite index was down 0.2 percent.

In late-afternoon trading in Europe, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 0.3 percent, while the FTSE 100 index in London was 1.1 percent lower. The euro rose to $1.3528 from $1.3458 late Thursday in New York.

Asian shares closed lower across the board.

European bank shares fell modestly amid concerns about tighter funding. The United States Federal Reserve said Thursday that the European Central Bank had drawn down $895 million of liquidity swaps in the week through Wednesday. The swap lines are designed to increase market liquidity both in the United States and overseas “by providing foreign central banks with the capacity to deliver U.S. dollar funding to institutions in their jurisdictions during times of market stress,” the Fed says on its Web site.

Since the summer, American and other investors have reduced their short-term dollar funding for euro zone banks, leaving the banks with a need for alternative sources of dollars.

Investors’ attention remained focused on the European bond market, where Spanish, Italian and French government debt has in recent days been trading at levels that show the euro zone contagion spreading to the “core” of the currency union.

Spanish 10-year bonds fell back to trade at 6.34 percent, while Italian bonds dipped to 6.66 percent — still nearly 5 percentage points above the yield on comparable German debt, the euro zone’s safest bet. French 10-years were trading to yield 3.52 percent.

The market pressure on Spain comes with a general election looming on Sunday. Voters are expected to return the conservative Popular Party to power, after almost eight years of Socialist government under José Luis Rodríguez Zapatero. The prospect of such a change, however, seems to have done little to alleviate concerns among investors, similar to the muted reaction to recent government changes in Greece and Italy.

Instead, analysts were concerned about how quickly a new government in Madrid would be able to announce and start implementing further cuts and other austerity measures, given that it will take about a month for an anticipated center-right administration to take officially the helm.

David Jolly reported from Paris and Raphael Minder reported from Madrid. Jack Ewing contributed reporting from Frankfurt.

Article source: http://www.nytimes.com/2011/11/19/business/global/daily-stock-market-activity.html?partner=rss&emc=rss