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US markets decline on worries of European debt crisis

15 Nov 2011 Evaluate

The US markets closed lower on Monday as Italy’s borrowing costs increased to a euro-era record at an auction, deepening concern that European will struggle to contain its debt crisis. The markets were in pessimistic mood on growing realization that Italy and Greece face daunting tasks in reforming their economies, cut expenses and revenues all at the same time. Investors are increasing the probability of a recession in the euro zone, weakening of the euro and falling US exports may slowdown its economy as well. Markets further came under pressure after German Finance Minister Wolfgang Schaeuble stated that Europe’s permanent bailout fund may not be implemented before 2013 and German Chancellor Angela Merkel’s party voted to offer euro states a way to leave the currency area.

In US, the president spoke at a news conference concluding a summit with Asia-Pacific leaders, where Obama reiterated the US stance that China is keeping its currency artificially low, putting American companies at a disadvantage. Also, with little more than a week to go until a November 23 deadline, members of Congress’ super committee remained divided along partisan lines in their effort to devise $1.2 trillion or more in deficit savings during the next decade.

The Dow Jones industrial average lost 74.70 points, or 0.61 percent, to 12,079.00. The Standard and Poor’s 500 closed lower by 12.07 points, or 0.96 percent, to 1,251.78, while the Nasdaq composite lost 21.53 points, or 0.80 percent, to 2,657.22.

The Indian ADRs closed in red on Monday, Infosys technologies was down by 1.78%, ICICI Bank was down by 1.10%, Tata Motors was down by 0.75%, HDFC Bank was down by 0.35% and Sterlite Industries was down by 0.34%.

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