US stocks slipped amid tepid consumer spending data, joining declines in equities around the world as oil's plunge into a bear market and struggles at European lenders added to global growth concerns. The yen strengthened after Japan's fiscal plan underwhelmed investors.
The S&P 500 Index headed for its first back-to-back losses in more than a month, with retailers pacing declines after data showed American consumers tapped into savings to increase spending last month. European shares slid as Commerzbank tumbled after scrapping its profit target. Japanese equities fell the most in almost four weeks and the yen reached a three-week high versus the dollar. Weak demand at a bond auction in Japan sparked a global selloff. Oil edged higher. The four-week advance in global equities has faltered as crude's 22 per cent rout since June rekindled concern about worldwide growth at the same time that European lenders have come under scrutiny over the strength of their balance sheets. Central banks and governments around the world have countered with stimulus to shore up growth, with Australia the latest to cut lending rates, though Japan's government spending package fell short of expectations.
'There really isn't reason to keep bidding the market higher right now," said Malcolm Polley, who oversees $1.3 billion as president and chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania. "The earnings season has been mixed, oil has weakened which seems to have taken people by a bit of surprise."
The S&P 500 fell 0.4 per cent to 2,161.57 at 10:06 am in New York. The index hasn't moved more than 0.5 per cent on a closing basis in 12 sessions, a two-week period where it's advanced 0.3 per cent after rallying 8.2 per cent in the previous three weeks.
Economic data gave a mixed picture for the outlook, with incomes rising a less-than-projected 0.2 percent in June and consumer purchases climbing more than anticipated. Incomes rose a less-than-projected 0.2 percent, while the saving rate declined to a more than one-year low.
Earnings will also be in focus, with American International Group Inc. among companies posting results. About 57 percent of S&P 500 members that have reported so far beat sales projections, while 80 percent topped profit forecasts. Analysts estimate profit at S&P 500 companies fell 3.2 percent in the second quarter.
The MSCI All-Country World Index fell 0.5 percent, while the Stoxx Europe 600 Index slipped 0.8 percent. Commerzbank tumbled 8.7 percent and UniCredit slid 5.4 percent as Il Messaggero reported that the lender may consider a capital increase of as much as 8 billion euros ($8.96 billion). Royal Dutch Shell Plc lost 1.1 percent, pulling crude producers lower.
The MSCI Emerging Markets Index fell 0.4 percent, with equity benchmarks in Abu Dhabi, Dubai, Russia and Saudi Arabia sliding more than 1 percent. Shares in Shanghai rebounded 0.6 percent from a one-month low. Hong Kong's market was shuttered by a typhoon.
Banks led Polish stocks up 3.4 percent, the biggest rally worldwide. Central bank Governor Adam Glapinski said proposals to exchange Swiss-franc mortgages into the local currency envisage gradual conversion through regulatory changes.
Currencies
The yen jumped 0.8 percent to 101.54 per dollar as the government announced 4.6 trillion yen ($45 billion) in extra spending for the current fiscal year, accounting for about a quarter of the total amount Prime Minister Shinzo Abe flagged in a speech last week. The currency touched the strongest level since July 11.
"The market is buying the rumor and selling the fact, so the yen has rallied after the headlines," said Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc. The announcement was another sign, after the central bank's meeting last week, that officials are failing to beat expectations, he said.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 peers, fell for the fifth time in six days.
The Australian dollar advanced 1 percent to 76.13 U.S. cents, reversing earlier declines. While Australia's economy has grown faster than the central bank predicted, core inflation and wage growth are both at record lows.
Malaysia's ringgit weakened 0.3 percent, the biggest decline among emerging-market currencies. The country loses 450 million ringgit ($111 million) in annual income for every $1 drop in oil and the nation derives about a fifth of its revenue from energy-related sources, according to government data.
Poland's zloty jumped, recording one of just four gainers versus the yen among 31 major currencies tracked by Bloomberg.
Bonds
Pacific Investment Management Co. says a record-setting rally in long-term Japanese government bonds has likely run its course because the central bank has pushed monetary policy as far as it can.
"We have probably seen the low of the yield of the super long JGBs," Tomoya Masanao, Pimco's head of portfolio management in Japan, wrote in an e-mail Monday. "The BOJ hit its limit," he wrote in a report on the company's website last week.
Japan's 10-year yield rose 8 1/2 basis points to minus 0.06 percent, spurring similar moves across the world after demand fell at an auction Tuesday. It has increased 23 1/2 basis points since July 27, the steepest four-day increase since May 2013.
Treasury 10-year note yields increased three basis points to 1.55 percent, after rising seven basis points on Monday.
Bond yields also rose across the euro-area, with that on benchmark German 10-year bonds increasing seven basis points to minus 0.032 percent.
Australia's 10-year bond yield fell 5.5 basis points to an unprecedented 1.823 percent.
Commodities
West Texas Intermediate crude was 1.3 percent higher at $40.56 a barrel after sliding to its lowest settlement price since April 18 on Monday. Futures have retreated about 22 percent from a peak reached in June, meeting the common definition of a bear market.
While American crude and gasoline inventories are forecast to have declined last week, they'll likely remain around the highest seasonal level in at least two decades. Nigeria has also resumed payments to former militants as the government seeks to establish a cease-fire after attacks cut the country's oil output to the least since 1989. Factions in Libya have reached a deal to re-open oil terminals
Gold headed for its longest stretch of gains since early July, advancing 0.7 percent to $1,362.76 an ounce.
Copper advanced 0.5 percent, while aluminum gained 0.7 percent and nickel rallied 0.9 percent.
Iron ore futures for Sept. Delivery fell 0.2 percent on Tuesday, after a 5.5 percent gain on Monday to close at the highest level in 17 months.
Rio Tinto Group, the world's second-biggest mining company, approved a $338 million iron-ore mine development in Australia, expanding a glut that's more than halved prices for the steel-making raw material in the past five years.
