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Stock-index futures fell as traders weighed a weak manufacturing report from China, mounting evidence that Europe's debt crisis is striking its heart, and a batch of mixed data on the U.S. economy.
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The broad S&P 500 has fallen for five straight days, shedding 5.6%, while the blue chips have slid 5% over the same period. Wall Street has been fixated on the euro zone debt crisis, which is increasingly becoming a global debacle.
An auction of German 10-year bonds was seen as dismal: the country attempted to raise raise 6 billion euros but only managed to drum up 3.889 billion euros, representing a 35% shortfall. This was the worst demand ever for 10-year German debt. The European Union's biggest economy had previously been seen as a safe haven during the crisis, and this development represents a dangerous development for the crisis that is already in its second year.
"This is a warning shot to Germany" to do more to support the 17-member euro currency bloc, and calm jittery debt markets, Kathleen Brooks, research director for FOREX.com, said in an interview with FOX Business.
The yield on the 10-year German bund rose to 2%, while other euro zone countries saw borrowing costs continue to rise as well. Of particular concern have been Italy and Spain -- both of which have seen benchmark yields near the closely-eyed 7% level.
Standard & Poor's warned on Wednesday that the euro zone may face a recession if debt yields remain high, potentially creating a feedback loop that can bring more pain to highly-indebted countries there.
European blue chips fell 0.31% while the euro plummeted 0.9% to $1.339.
Also concerning for market participants is a preliminary reading of Chinese manufacturing data in November. The Markit/HSBC Flash China Manufacturing gauge took its swiftest fall since March 2009, showing manufacturing in the world's second-biggest economy is now contracting. A separate report showed the euro zone economy may contract between 0.5% to 0.6% in the fourth quarter.
Stock-index futures trimmed their losses slightly on a mixed batch of U.S. economic data.
New claims for unemployment benefits climbed to 393,000 last week from a revised 391,000 the week prior. Economists had expected claims to rise to 390,000 from an initially reported 388,000. The labor market has been slow to improve after being slammed during the economy downturn.
Meanwhile, orders for long-lasting goods fell 0.7% in October from the month prior, a shallower fall than the 1% decline economists forecast. Excluding the transportation component, orders were up 0.7% compared with estimates of no change. These data figure directly into broader calculations of economic growth.
Personal spending rose 0.1% in October from September, less than the 0.4% economists had expected, while personal income rose 0.4%, slightly higher than the 0.3% expected. A separate report is forecast to show consumer sentiment ticked slightly higher in late November.
Energy markets were in the red, but may be particularly volatile as the Energy Department is releases its weekly inventory report on Wednesday. The benchmark crude oil contract traded in New York fell $1.74, or 1.8%, to $96.28 a barrel. Wholesale RBOB gasoline fell 5 cents, or 1.8%, to $2.52 a gallon.
In metals, gold fell $11.10, or 0.64%, to $1,691 a troy ounce. The yield on the benchmark 10-year U.S. Treasury note fell to 1.919% from 1.92%.
European blue chips fell 0.31%, the English FTSE 100 slid 0.71% to 5,170 and the German DAX rose 0.13% to 5,545.
In Asia, the Japanese Nikkei 225 fell 0.4% to 8,315 and the Chinese Hang Seng plunged 2.1% to 17,864.