Stocks Move Little in World Markets, and Euro Declines

Major world equity markets were mostly little changed Monday in light trading, with U.S. and British markets closed for holidays.

In Mexico City, shares of the country’s No. 5 financial group, Banorte, surged on talk that it may be close to reaching a deal to sell itself, but the Mexican market overall eased slightly.

In currency trading, the euro lost ground, threatening to fall back to the six-month low reached last week--good news for U.S. tourists headed for Europe this summer.

European stocks were mixed, lacking direction in large part because U.S. and British markets were shuttered. U.S. markets observed the Memorial Day holiday. In London, markets were closed for a banking holiday.

On Friday, the Dow Jones industrial average lost 117.05 points, or 1.1%, to 11,005.37, while the Nasdaq composite was down 30.99 points, or 1.4%, to 2,251.03.

On Monday, the German DAX stock index fell 0.1% to 6,216.83. The Spanish market gained 0.8%, but the Swiss market lost 0.1%.

In Paris, speculation that France’s Alcatel is discussing an acquisition of troubled Lucent Technologies pulled Alcatel shares down 6.8%. But France’s main CAC share index rose nearly 0.5%.

Year to date, the Bloomberg index of 500 European blue-chip stocks is down 3.9%, compared with a 3.2% decline for the U.S. Standard & Poor’s 500 index and an 8.9% loss for the Nasdaq index.

The euro eased to 86 U.S. cents in European trading Monday, down from 86.1 cents Friday in New York. On Thursday, the euro fell to 85.7 cents, its lowest since November, on concerns about slowing economic growth on the Continent.

A weak euro means the dollar’s purchasing power is greater in Europe, which benefits U.S. tourists and buyers of European imports. One euro had cost as much as 95 cents in January.

But the currency’s latest slide is bad news for U.S. investors in European stocks because it automatically devalues their holdings when translated into dollars. The Bloomberg-500 stock index is down 12.3% year to date in dollar terms.

In Asian trading Monday, most markets ended with losses. Tokyo’s Nikkei-225 index fell 28.15 points, or 0.2%, to 13,737.77, its fifth straight decline. The index is down 0.4% year to date.

Analysts said the market’s latest pullback reflected renewed concerns over the size of bad loans held by Japanese banks.

The Philippines’ key share index slid 1.1% to 1,395.12 on Monday, dragged down by Sunday’s kidnapping of 20 people, including three American tourists, from an upscale resort in Palawan province.

In Mexico, shares of Banorte jumped 5% on market talk that it was meeting with rival Scotiabank Inverlat to discuss the possibility of a merger.

Speculation that Banorte would be acquired has intensified since financial giant Citigroup announced a $12.5-billion deal to buy Mexico’s No. 2 bank, Banacci, May 17.

But Mexico’s main IPC share index fell 0.2% Monday to 6,700.33. It is up 18.5% this year, one of the best performances by any market, as foreign investors have poured back into Mexican shares.

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Euro Slide

The euro currency’s value has slumped again in recent months, good news for U.S. tourists in Europe but bad news for U.S. investors in European stocks.

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Cost of one euro in U.S. dollars, monthly closes and latest

Monday: $0.86

Source: Bloomberg News