Stocks Edge Lower on Mixed Data

Wall Street opened slightly lower Thursday while stocks in Europe recovered some ground as traders weighed relatively positive economic data in the United States against signs of increasing pressure from the sovereign debt crisis in Europe.

In the United States, the Labor Department reported that the number of people seeking unemployment benefits last week fell to the lowest level in several months. Separately, the Commerce Department said permits for future home construction rebounded strongly last month. The two reports bolstered views that the country’s economic recovery was gaining traction.

“The U.S. economy continues to show signs of strong momentum,” Millan Mulraine, a senior macro strategist at TD Securities in New York, told Reuters.

The data helped offset concerns about the latest developments in the euro zone debt crisis.

The Spanish Treasury paid 6.97 percent in an auction Thursday to sell 10-year bonds — the most it has had to pay since 1997, before the advent of the euro — and well above the 5.43 percent it paid at a comparable auction in October. France paid 2.8 percent to sell bonds maturing in July 2016, up from the 2.3 percent it paid in October.

In late afternoon trading in Europe, the Euro Stoxx 50 index of euro zone blue chips, which had fallen almost 2 percent, was down about 0.5 percent, while the FTSE 100 index in London fell 1.4 percent. European stocks are down about 14 percent so far this year.

In morning trading in New York, the Dow Jones industrial average was down about 0.4 percent, while the Standard & Poor’s 500 index and the Nasdaq composite were off about 0.5 percent. The S.&P. 500 fell 1.7 percent on Wednesday, giving it a 1.7 percent loss for 2011.

European bank shares led all market sectors lower, continuing on from the action Wednesday in New York. Fitch Ratings on Wednesday warned that the euro zone’s problems risked becoming American problems, saying “U.S. banks could be greatly affected if contagion continues to spread beyond the stressed European markets” of Greece, Ireland, Italy, Portugal, and Spain.

But it was in the bond market that worries were most pronounced. Spanish 10-years were trading on the secondary market at 6.60 percent after the Treasury auction. News agencies cited traders as saying the European Central Bank had been buying the securities on the open market.

The spread, or interest rate differential, between French and German 10-year bonds rose Thursday to more than 2 full percentage points for the first time in the euro era. French 10-year yields later receded to a yield of 3.67 percent, while German 10-years were at 1.78 percent. Comparable U.S. debt was trading at 1.98 percent. Italian 10-years were trading at 6.96 percent.

As German bonds are considered to be the most secure in Europe, the growing spreads shows investors are demanding a higher interest rate to hold French, Italian and Spanish debt.

Asian shares were mixed. The Tokyo benchmark Nikkei 225 stock average rose 0.2 percent, and the Sydney market index S&P/ASX 200 rose 0.3 percent. In Hong Kong, the Hang Seng index fell 0.8 percent and in Shanghai the composite index fell 0.2 percent.