Issue link: https://www.epageflip.net/i/51329
6B Daily News – Thursday, December 29, 2011 Furniture DEPOT 235 S Main St., Red Bluff 530 527-1657 www.thefurnituredepot.net HOURS: MONDAY-FRIDAY 9:00-6:00 SATURDAY 9:00-5:00 • SUNDAY 11:00-5:00 NEW YORK (AP) — Stocks closed lower Wednesday after Europe's central bank disclosed figures sug- gesting that banks in the region were becoming increasingly reluctant to lend to each other. The Dow Jones industrial average lost nearly 140 points and the S&P 500 index fell after five days of gains. Stocks slide; S&P 500 turns negative for year Wall Street The S&P is now nega- tive for the year again, after barely turning pos- itive on Friday. The European Central Bank said the conti- nent's banks parked $590.72 billion with it overnight, surpassing the record set only Mon- day. That means those banks were less willing to take the risk of mak- ing short-term loans to each other, opting instead to earn low inter- est rates from the ECB. The disclosure also hurt the euro, which fell to $1.291, its lowest level against the dollar since January. The worrying news from the ECB overshad- owed two successful auctions of Italian gov- ernment debt. Italy was able to pay much lower borrowing rates than last month. The strong demand from investors raised hopes that Italy would be able to avoid sinking into a financial crisis, as smaller coun- tries like Greece and Portugal have. John Merrill, chief investment officer at Tanglewood Wealth Management, said mar- kets would remain vul- nerable to flare-ups in Europe's long-running financial crisis until leaders there come up with more convincing solutions for paying down their enormous debt loads and keeping the 17-nation currency union intact. ''We live in a Band- Merrill Aid world,'' said. ''Nobody really is addressing underlying issues.'' European leaders agreed at a summit Dec. 9 to forge closer fiscal ties over the long term, but investors are still worried that Greece might default on its debt or be forced to leave the euro bloc. A Greek exit from the currency union would likely cause huge disruptions for the coun- try's economy and loss- es for European banks that hold Greek govern- ment debt. Investors fear that could cascade into another global financial panic, as happened in 2008 following the col- lapse of the U.S. invest- ment bank Lehman Brothers. The Dow Jones industrial average fell 139.94 points, or 1.1 percent, to 12,151.41. Materials and energy companies led the declines. Alcoa Inc. fell 3 percent and Caterpillar Inc. fell 2.4 percent. Trading was very thin in a holiday-shortened week. Shares traded on the New York Stock Exchange totaled 2.3 billion, less than half of the usual volume. The S&P 500 fell 15.79 points, or 1.3 per- cent, to 1,249.64. The Nasdaq composite declined 35.22 points, or 1.3 percent, to 2,589.98. The Bank of Italy raised $11.8 billion in two bond auctions, reflecting investor approval of the coun- try's recently passed austerity measures. The yield on Italy's six- month bill offering was half the interest rate the country paid in a similar Friday, Saturday & Sunday Entire Inventory auction last month. The yield on the country's 10-year bond remained dangerously high, how- ever, at 6.93 percent. It had risen to 7 percent Tuesday, a level that is considered unsustain- able. Italy is the euro zone's third-largest economy and is consid- ered too big to save under the euro zone's current bailout funds. Investors have grown fearful over the past few months that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 tril- lion. The worries were reflected in U.S. bank stocks. Bank of America Corp. fell 3.5 percent, while Regions Financial Corp. fell 2.7 percent. In other corporate news: — Sandridge Energy Inc. stock declined 4.4 percent on news that it is selling drilling rights in two states to a Spanish energy company, Repsol YPF. — Cavium Inc. fell over 1 percent, a day after the chipmaker said its fourth-quarter results will fall below its previ- ous forecast. 20% OFF