Stocks fall with euro on growth concern; U.S., German bonds gain

July 12 (Bloomberg) -- Global stocks slid for a seventh day, the longest slump since November, amid concern a faltering economic recovery will hurt corporate profits. The euro fell to a two-year low, the yen and dollar gained and government bond yields from Germany to South Korea fell to records.

The MSCI All-Country World Index lost 1 percent at 4 p.m. in New York and the Standard & Poor’s 500 Index slipped 0.5 percent, while rallies in Procter & Gamble Co. and Merck & Co. limited the Dow Jones Industrial Average’s drop. German two-year note yields fell to minus 0.042 percent and 10-year U.S. yields were within four basis points of the lowest ever. The yen rose against all 16 major peers and the dollar gained versus 13. Corn and wheat led commodities up as a drought threatens U.S. crops. Oil erased losses as the U.S. added sanctions against Iran.

Bank of America Corp. strategists reduced earnings estimates for S&P 500 companies for this year and next, citing Europe’s debt crisis and slowing economic growth in China. Investors are bracing for what’s projected to be the first drop in U.S. corporate profits in almost three years, while China’s growth is forecast to fall below 8 percent for the first time since 2009, according to the median estimate of economists in a survey.

“There’s a worldwide slowdown,” Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, said in a phone interview. The firm oversees $40 billion. “Wall Street analysts have been reducing their second-quarter earnings estimates as companies have guided them lower. Profit growth, which has been a main driver for the market, will be less supportive going forward.”

Losses Pared

The S&P 500 pared losses today after dropping as much as 1.2 percent to 1,325.41, dipping below its average price from the past 50 days for a third straight day. The index closed at 1,334.76, compared with its 50-day moving average of 1,334.546, according to Bloomberg data.

“Short term, the market got oversold,” Michael James, a managing director of equity trading at Wedbush Securities Inc. in Los Angeles, said in a phone interview. “There is at least a willingness of buyers to step in today given the weakness that we’ve seen over the last several days. You have some potential market-moving news tomorrow, with earnings from JPMorgan and Wells Fargo.”

The S&P 500 has retreated almost 3 percent over the last six days. Stocks fell today even after applications for U.S. jobless benefits last week decreased by 26,000 to 350,000, the fewest since March 2008, Labor Department figures showed. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg News survey. The decrease reflected the volatility of claims during the annual auto-plant retooling period.

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