U.S. Stocks Pare Losses on Speculation ECB to Help Europe Banks

U.S. Stocks Pare Losses on Speculation ECB to Help Europe Banks


May 7 (Bloomberg) -- U.S. stocks trimmed losses as speculation the European Central Bank will take steps to halt the region’s debt crisis helped the Standard & Poor’s 500 Index erase most of a 3 percent plunge.

Financial shares in the S&P 500 briefly turned higher, after sliding as much as 2.7 percent in the first hour of trading, amid speculation the ECB will reinitiate a facility to provide the region’s banks with emergency funding.

“This cheap cost of funding gave European banks in ‘09 a chance to recapitalize their balance sheets by basically providing cheap money, as the proceeds in many cases were used to buy other short-term, higher yielding debt,’’ said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, in a note to clients.

The S&P 500 was down 0.6 percent at 1,121.28 at 11:56 a.m. in New York.

source: bloomberg.com