World stocks little changed after S&P warning, hopes still for deal

The following is an excerpt from an article in Reuters India and Yahoo! News India that quotes Finance Professor Jeff Bergstrand about after S&P’s downgrade warning to 15 euro nations. To read the entire article visit: World stocks little changed after S&P warning, hopes still for deal

U.S. and European stocks were little changed on Tuesday after S&P’s downgrade warning to 15 euro nations, though analysts expressed a cautious hope the move would spur leaders into more decisive action.

However, such optimism remained fragile and the euro surrendered earlier gains against the dollar. Jitters also halted a six-session run for global stocks with the MSCI world equity index down 0.9 percent.

Standard & Poor’s warned late on Monday it could cut credit ratings across the euro zone, underscoring just what is at stake ahead of a key summit this week. It could also help Germany and France force through proposed treaty changes.

There were other signs of nervousness with banks increasingly reluctant to lend to each other. The spread between three-month euro Libor rates and overnight indexed swap rates — an indicator of financial stress – stood at 92 basis points — near its highest in nearly three years hit on December 1 at 93 bps.

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