How do you know when your tamagotchi isn't turning out well?

Answer 1

Stock markets traded lower for a third session Tuesday on continuing concern about Europe's debt crisis, a day after bond rating agency Moody's Investors Service lowered its credit outlook for Germany.

In Toronto, the S&P/TSX composite index closed 78.59 points lower at 11,466.95.

In the U.S., the Dow Jones industrials average was down 104.14 points at 12,617.32, the Nasdaq composite index was off 27.16 points at 2,862.99 and the S&P 500 index lost 12.21 points to 1,338.31.

The Canadian dollar was lower as traders continued to avoid riskier assets such as resource-based currencies. The currency was down 0.35 of a cent to 98.00 cents US.

The move by Moody's amounted to a warning that it might downgrade the debt rating of Europe's biggest economy. It also warned that the Netherlands and Luxembourg could see their ratings cut.

All three now have an Aaa rating.

Moody's cited the "rising uncertainty" over the outcome of Europe's debt crisis, the "increased likelihood" that Greece will leave the eurozone and the growing possibility Germany would bear a significant share of the burden to help bail out Spain and Italy.

Confidence about Spain's ability to deal with its finances has taken a beating, with the country forced to pay ever higher yields in order to finance its debt. The yield on its benchmark 10-year bond surged well past the seven per cent mark Monday, a level considered unsustainable.

Spanish short-term yields riseThe yield on the country's 10-year bonds was off early highs but still up another 0.08 percentage points Tuesday at 7.51 per cent.

On Monday the yield rose to an intraday high of 7.56 per cent.

Spain also paid more to finance its short-term debt. On Tuesday, Spain's Treasury sold €1.63 billion in three-month bills at an average interest rate of 2.43 per cent compared to 2.36 per cent in the last such auction June 26.

Moody's also raised concerns about the vulnerability of Germany's banking system if the crisis worsens.

London's FTSE 100 index closed off 0.63 per cent, Frankfurt's DAX was 0.45 per cent lower and the Paris CAC 40 lost 0.87 per cent. The euro traded down 0.5 per cent at $1.2056 US.

The September crude contract on the New York Mercantile Exchange shook off early losses to close up 36 cents at $88.50 US a barrel after plunging almost $4.

Copper lost two cents to $3.36 US a pound on top of Monday's seven-cent drop while August bullion lost $1.20 to $1,576.20 US an ounce.

Copper prices fell despite some positive news about the Chinese economy.

Preliminary results of HSBC's monthly survey of Chinese manufacturers showed the contraction in manufacturing eased in July. The bank's Purchasing Managers' Index which combines various measures of manufacturing activity rose to 49.5 from 48.2.