Global shares edged lower Monday, posting their first monthly loss this year as Spain sank into recession and the US economy showed signs of slowing.
Treasury prices rose, while the euro fell and the dollar slipped to a more than two-month low against the yen as anxiety over economies on both sides of the Atlantic led investors to favor lower-risk investments over stocks and other risky assets.
Spain, the euro zone's fourth-largest economy, slipped into recession in the first quarter as domestic demand fell, joining Italy, Portugal, Ireland, Greece, Belgium and the Netherlands on the list of countries with shrinking economies.
In the United States, consumers boosted spending only modestly last month and a gauge of Midwestern business activity fell sharply in April, suggesting the economy entered the second quarter with less steam.
"Growth is beginning to fade around the world," said Justin Hoogendoorn, fixed income strategist at BMO Capital Markets in Chicago.
The MSCI world equity index .MIWD00000PUS slipped 0.2% to 328.66. For the month, the index was down 1.4%, though still up nearly 10% this year to date.
On Wall Street, the S&P 500 posted its first monthly decline since November. The Dow Jones industrial average ended down 14.68 points, or 0.11%, at 13,213.63. The Standard & Poor's 500 Index closed down 5.45 points, or 0.39%, at 1,397.91. The Nasdaq Composite was down 22.84 points, or 0.74%, at 3,046.36.
Still, analysts said the picture was not overwhelmingly negative. Last week brought four days of back-to-back gains that helped the index erase steeper losses for the month. The S&P closed above 1,400 for the first time in three weeks on Friday, spurred by better-than-expected corporate earnings.
"On the trading front, in equities, we stepped back to neutral several weeks ago," Goldman Sachs said in a research note. "Our general view is that the US seems to be slowing - though how much and for how long is an open question - while equity market domestic growth views remain elevated."
In the euro area, trading was light ahead of May Day holiday on Tuesday, elections in France and Greece at the weekend and a European Central Bank meeting on Thursday where policymakers will have to consider the region's worsening economic health.
The FTSEurofirst 300 index of top European shares .FTEU3 ended down 0.8% to 1,043.28. Emerging market shares .MSCIEF however, gained 0.5%.
The euro fell 0.1% to USD 1.3236, off a near one-month high of USD 1.3270 hit on Friday. It was on track for its worst month since December.
Signs of a deepening euro-zone recession raised worries that governments could soften their approach to tackling budget deficits. Several countries in the region are under intense pressure to cut spending to help reduce their debt to sustainable levels.
Growing opposition to austerity measures is expected to be a large factor in weekend elections in France and Greece after disputes about austerity brought down center-right coalition governments in the Netherlands and Romania last week.
"In short, the news from Europe continues to point to further structural stress in the system," said Boris Schlossberg, director of FX research at GFT in Jersey City, New Jersey.
The dollar lost 0.5% to 79.82 yen after falling as low as 79.71 yen, the lowest level since February. The pair was on track for its worst month since July 2011.
The greenback briefly touched a two-month low against a basket of currencies .DXY at 78.638, its lowest since March 1, before recovering to 78.796, up 0.1% on the day.
The benchmark 10-year US Treasury note was up 5/32, the yield at 1.93%. Yields on 10-year note fell from 2.31% in the earliest trading sessions of the month to 1.93% late on Monday, a fall of nearly 40 basis points and its biggest monthly drop since last September.
In commodity markets, gold prices steadied above USD 1,660 an ounce on speculation of a third round of liquidity stimulus from the Federal Reserve. For the month, bullion dropped about 0.3%, posting a third straight monthly decline for the first time since 2000.
Brent June crude futures settled down 36 cents at 119.47 a barrel. US crude settled down 6 cents at USD 104.87 a barrel.
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