US stocks fell, sending the Dow Jones Industrial Average toward the lowest level on a closing basis this year, amid concern Greece may leave the euro and as Dell Inc tumbled on a disappointing revenue forecast.
The Standard & Poor’s 500 Index fell 1.3 per cent to 1,299.19 at 12:20 p.m. New York time. It traded near its average price of the last 200 days of about 1,280.
The Dow decreased 169.15 points, or 1.4 per cent, to 12,333.66. The gauge trimmed this year’s gain to 1 per cent. Trading in S&P 500 companies was 1.8 per cent above the 30-day average at this time of day.
The FTSE Eurofirst index of top European shares provisionally closed 2.2 per cent lower at 971.99 after touching a fresh year low at 970.98.
Oil tumbled below $90 a barrel in New York for the first time since November after government report showed that US crude supplies rose to a 22-year high and as European leaders meet to discuss the euro region’s debt crisis.
Euro zone finance officials prepared contingency plans for a possible Greek euro exit on Monday afternoon, according to Euro zone sources, during an hour-long teleconference of the Eurogroup Working Group.
The MSCI All-Country World Index lost 2.1 per cent as European leaders meet to discuss the region’s crisis.
A document seen by Reuters detailed the potential costs to individual member states of a Greek exit and said that if it came about, an “amiable divorce” should be sought.
“A Greek exit would be a Pandora’s box,” said Jacques- Pascal Porta of Ofi Gestion Privee in Paris.
Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro.
While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say.
“A Greek exit would be a Pandora’s box,” said Jacques- Pascal Porta, who helps manage $570 million at Ofi Gestion Privee in Paris, including shares in Deutsche Bank AG and BNP Paribas SA. “It’s a disaster that would leave the door open to other disasters. The euro’s credibility will be weakened, and it would set a precedent: Why couldn’t an exit happen for Spain, for Italy, and even for France?”
Oil
Futures fell as much as 2.4 per cent after the Energy Department said stockpiles rose 883,000 barrels to 382.5 million barrels last week.
Crude oil for July delivery fell $2.14, or 2.3 per cent, to $89.71 a barrel at 12:30 p.m. on the New York Mercantile Exchange. Futures touched $89.62, the lowest level since Nov. 1. Prices are down 9.2 per cent this year. Oil traded at $90.71 before release of the report at 10:30 a.m. in Washington.
Brent oil for July settlement fell $2.85, or 2.6 per cent, to $105.56 a barrel on the London-based ICE Futures Europe exchange. The European-benchmark contract touched $105.51, the lowest level since Dec. 20.
The euro slipped as much as 1 per cent to $1.2555, the lowest level against the dollar since July 2010. A falling euro reduces the appeal of raw materials as an investment. The Standard & Poor’s GSCI Index of 24 commodities was down 1.9 per cent and touched the lowest level since December.
