* Negative sovereign credit rating actions curb risk trade
* Global stocks, commodities fall; oil down $2 a barrel
* Treasuries sell off after poor 10-year note auction
* US dollar halts three-day advance
By Walter Brandimarte
NEW YORK, Dec 9 (Reuters) - A series of negative sovereign
credit rating actions across Europe and the Middle East
dampened appetite for higher-yielding assets on Wednesday and
weighed on stock and commodity prices.
Even as investors became more averse to risk, U.S. Treasury
prices fell following an unexpectedly weak auction of 10-year
notes. The U.S. dollar posted losses after three consecutive
sessions of gains.
European shares were hit by a Standard & Poor's warning it
could downgrade Spain's AA-plus sovereign credit rating, one
day after Fitch decided to cut Greece's rating to BBB-plus. For
details, see [].
Adding to global credit fears, Moody's said it was
reviewing the ratings of issuers related to the government not
just of Dubai but of neighboring emirate Abu Dhabi and the
federal government of the seven-member United Arab Emirates
federation.
"The real issue is what this could do as countries turn to
their taxpayers to raise revenue in order to protect their
credit worthiness," said Kevin Caron, market strategist at
Stifel, Nicolaus & Co in Florham Park, New Jersey.
"This could mean higher tax rates when we have to pay for
the stimulus, and that would hurt growth going forward."
U.S. stocks posted lighter losses, however, as the market
was supported by an unexpected rise in October wholesale
inventories, which analysts said pointed to economic recovery.
[]
The Dow Jones industrial average <> dipped 4.46 points,
or 0.05 percent, to 10,281.28, while The Standard & Poor's 500
Index <.SPX> fell 2.72 points, or 0.25 percent, to 1,089.22.
The Nasdaq Composite Index <> was down 5.89 points, or
0.27 percent, at 2,167.10.
The FTSEurofirst 300 <> index of top European shares
ended down 1 percent, the lowest close since Nov. 30, weighed
down by financial shares. The benchmark index is still up 20
percent this year and has surged 54 percent since hitting a
record low in early March.
The MSCI all-country world stock index <.MIWD00000PUS> lost
0.67 percent, while an emerging market stocks index <.MSCIEF>
fell 0.89 percent.
Prices of raw material also fell investors became more
cautious and avoided the recent "risk trade" which consists of
buying stocks and commodities.
U.S. light crude oil <CLc1> fell $2.01, or 2.77 percent, to
$70.61 per barrel, while spot gold prices <XAU=> lost 0.93
percent to $1,119.10.
The Reuters/Jefferies CRB Index <.CRB> of commodities
futures was down 1.35 percent.
DOLLAR HALTS GAINS
But the U.S. dollar halted a three-day winning streak as
investors concluded the recent rally is overdone.
The greenback was down against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
down 0.16 percent.
Against the Japanese yen, the dollar <JPY=> was down 0.67
percent at 87.81. The euro <EUR=> was practically stable at
$1.469, however.
"Neither of these developments, Spain or Greece and their
sovereign credit ratings, can be interpreted as good for the
euro," said Joseph Trevisani, chief market analyst at FX
Solutions in Saddle River, New Jersey.
"But the market has known about these things for some time
so there won't be too big a reaction."
Prices of U.S. Treasuries also fell, despite some safety
bid, after the sale of $21 billion in 10-year notes attracted
poor demand.
Analysts said the deal suffered from bad timing, given many
professional investors are unwilling to commit funds for longer
periods this close to the year-end.
The benchmark 10-year Treasury note <US10YT=RR> was last
down 13/32, yielding 3.44 percent, compared with 3.89 percent
late Tuesday. The 30-year Treasury bond <US30YT=RR> was down
30/32, yielding 4.43 percent against 4.37 percent late
Tuesday.
(Additional reporting by Ryan Vlastelica, Nick Olivari, Burton
Frierson and Richard Leong; Edited by Andrew Hay)
