Stocks in U.S., Europe slide as Treasuries rally

The Standard & Poor’s 500 Index sank 2.4 percent at 9:40 a.m. in New York following the gauge’s biggest jump in more than two years yesterday. The Stoxx Europe 600 Index lost 1.5 percent as Paris-based lender Societe Generale (GLE) SA plunged 14 percent. The 10-year Treasury yield fell 10 basis points to 2.15 percent after touching a record low of 2.03 yesterday.

France’s borrowing costs are rising as Europe’s debt crisis makes investors wary of lending to any nation other than Germany. Central banks are fighting to prevent a recession, with Federal Reserve Chairman Ben S. Bernanke vowing yesterday to keep borrowing costs at an all-time low to revive a recovery that’s “considerably slower” than expected. People familiar with the transactions said the European Central Bank bought Italian and Spanish bonds. Switzerland’s central bank said today it will “significantly” increase the supply of liquidity to banks, and

The S&P 500 rallied 4.7 percent yesterday, rebounding from its worst slump since the bear market in 2008, after the Fed announced plans to keep its benchmark rate at a record low through mid-2013 and said it considered other tools to bolster economic growth. Six companies in the index are due to release results today, including News Corp. and Cisco Systems Inc.

Three stocks fell for each that gained in the Stoxx 600. Intesa Sanpaolo, the Italian lender, and French bank BNP Paribas lost more than 9.8 percent.

The yield difference between two- and 10-year Treasuries was near the narrowest since October, underscoring concern about the pace of the economic recovery. The government sells $24 billion of 10-year securities today after yesterday’s auction of three-year securities drew the lowest yield since records began in May 1981 in the first note sale since Standard & Poor’s cut the U.S. debt rating on Aug. 5.

The Spanish 10-year yield fell five basis points to 5.04 percent and Italian yields decreased seven points to 5.11 percent. Italy sold 6.5 billion euros ($9.4 billion) of 366-day bills, with the average yield at 2.959 percent, compared with a yield of 3.67 percent at the previous sale on July 12.

The cost to insure French government debt against default rose four basis points to a record 165 basis points, according to CMA.

The Swiss franc erased earlier losses against the euro, while retreating versus the dollar. The Swiss National Bank said today it boosted the supply of liquidity to banks by expanding sight deposits to 120 billion francs ($165 billion) from 80 billion francs. It will also conduct foreign-exchange swap transactions, a tool last used in 2008. The central bank said it’s ready to take further measures if needed.

The S&P GSCI index of 24 commodities rose for the first time this week. Oil climbed 1.8 percent to $89.73 a barrel after crude inventories fell the most since June, according to the American Petroleum Institute.

Gold jumped 1.8 percent to $1,771.23 an ounce, in London the fourth consecutive gain. Commodities may outperform equities the rest of the year because of record demand and shortages, according to Barclays Capital.

The MSCI Emerging Markets Index rallied 1.5 percent, set for the biggest gain since May. Taiwan’s Taiex Index advanced 3.3 percent, while the Czech PX Index jumped 1 percent. (Bloomberg)