DJI- NEW YORK, May 16 (Reuters) - U.S. stocks and the euro slid on Wednesday on news that some Greek banks face emergency funding needs, while minutes from the Federal Reserve's April meeting showed U.S. economic prospects remain sobering.
The European Central Bank stopped funding operations for some Greek banks as they are undercapitalized, the ECB said, confirming a Reuters report that had fanned concerns about Greece's financial difficulties. [ID:nL5E8GGJDT]
The funding needs highlighted the weak state of the banking sector in Greece, where many Greeks are withdrawing money out of fear their country may soon leave the euro zone.
The euro slid and shares in Europe closed lower in choppy trading as worries mounted over the stability of the euro zone.
Greece plans to hold fresh elections in mid-June that likely will determine whether it remains in the common currency area.
"All eyes continue to be trained on Europe, what is going to happen in Greece, what the potential fallout from that is going to be," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
The Dow Jones industrial average <.DJI> closed down 33.45 points, or 0.26 percent, at 12,598.55. The Standard & Poor's 500 Index <.SPX> fell 5.86 points, or 0.44 percent, at 1,324.80. The Nasdaq Composite Index <.IXIC> shed 19.72 points, or 0.68 percent, at 2,874.04.
Efforts by German Chancellor Angela Merkel and new French President Francois Hollande to quell talk of a possible Greek exit from the euro zone bolstered sentiment for much of the day.
But U.S. stocks retreated on the ECB news and the Fed minutes, which showed several members of the U.S. central bank's policy-setting committee had indicated that additional monetary policy accommodation could still be necessary. [ID:nW1E8FB04P]
Data showing U.S. industrial production posted its fastest growth in over a year in April and a surge in groundbreaking for new homes that suggested a rebound in U.S. housing was gaining some traction had spurred early U.S. stock market gains. [ID:nL1E8GG2R8]
Investors have also turned to Treasuries and other perceived safe-haven assets, however, on signs of slowing growth in China and jitters about banking in the wake of the $2 billion trading loss at JPMorgan Chase & Co , traders and analysts said.
"The (Treasuries) market is long and traders see the mess in Europe won't be resolved for a long time," said Thomas Roth, executive director of U.S. government bond trading at Mitsubishi UFJ Securities USA in New York. "The market is priced for Armageddon."
The euro slid for a fourth straight session, dropping to a four-month low against the U.S. dollar.
The euro was down 0.13 percent at $1.2713. The dollar index <.DXY>, a basket measuring the greenback's strength against other major currencies, rose 0.23 percent to 81.405.
NYMEX- NEW YORK, May 16 (Reuters) - U.S. crude futures fell a fourth straight session on Wednesday as political turmoil and banking problems in Greece raised new concerns about the euro zone's debt crisis.
Oil and Wall Street equities were pressured after the European Central Bank said it had stopped providing liquidity to some Greek banks as they have not been successfully recapitalized. [ID:nL5E8GGJDT]
The development highlighted the weak state of the banking sector in Greece, where Greeks are pulling euros out of the banks in fear that their country may exit the European currency. [ID:nL5E8GGASZ]
Earlier, U.S. crude briefly turned higher after Energy Information Administration data showed a smaller increase than that in an industry report earlier in the week. The increase was more than expected at 2.13 million barrels, but less than the 6.6-million-barrel jump reported on Tuesday by industry group the American Petroleum Institute. [EIA/S] [API/S]
U.S. crude stocks had been forecast to rise by 1.7 million barrels, a Reuters survey of analysts taken ahead of the weekly reports showed. Distillate stocks were pegged to be down 600,000 barrels and gasoline stocks to have fallen 500,000 barrels.
* On the New York Mercantile Exchange, June crude fell $1.17, or 1.24 percent, to settle at $92.81 a barrel after dropping to $91.81 to set the lowest intraday price since Nov. 3. It traded up to $94.16.
* U.S. President Barack Obama will seek support for tapping strategic oil reserves from other Group of Eight leaders at a summit this weekend before the European Union's July embargo of Iranian crude, Kyodo news agency reported. [ID:nL1E8GGEWR]
* Oil prices remain a threat to the fragile global economic recovery despite a recent fall, the International Energy Agency's chief economist said, adding the IEA remained ready to release emergency oil stocks if needed. [ID:nL5E8GGJZM]
CBOT SOYBEAN- Nearby soybean futures on the Chicago Board of Trade ended higher, gaining sharply against back months on firm cash markets and rumors of Chinese export demand for U.S. old-crop supplies, traders said.
* The premium for spot July soybeans over new-crop November rose to $1.18-1/2 by the closing bell, gaining 10-1/2 cents for the day and surging from 84-3/4 cents at the end of last week.
* Soymeal posted the biggest gains in the soy complex, while soyoil tumbled more than 2 percent on meal/oil spreading.
* Trade expects USDA on Thursday to report U.S. soybean export sales in the latest week at 1 million to 1.4 million tonnes, including 400,000 to 500,000 tonnes of old-crop soybeans. [ID:nL1E8GGF5D]
* Worries about the euro zone's debt crisis pressured back months. U.S. crude oil fell for a fourth session as political turmoil and banking problems in Greece reinforced concerns about
the euro zone. [O/R]
* As of 1:45 p.m. CDT (1845 GMT), ICE July soybean futures were up 9 cents at $14.22 a bushel, on volume of 1,078 contracts.
* ICE Futures Canada said it would raise margins for trading canola futures by about 16 percent, effective at the close of business on Thursday. [ID:nL4E8GGAES]
* The China National Grain and Oils Information Center projected a 7 percent drop in China's 2012 soy production to 13 million tonnes, after a 10.5 percent fall in 2011, as farmers shift to growing corn due to higher returns. [ID:nL4E8GG12H]
* Trade sources said CNGOIC raised its estimate of 2011/12 Chinese soy imports to 58 million tonnes, up 3 million from its previous estimate and up 2 million from USDA's current estimate.
FCPO- SINGAPORE, May 16 (Reuters) - Malaysian palm oil futures tumbled to their lowest in more than three months on Wednesday, as traders feared a prolonged political crisis in Greece could slow the global growth momentum and dampen commodity demand.
Greece's warring parties have refused to form a viable coalition, triggering new elections that could potentially result in a euro zone exit. [ID:nL5E8GG0S1]
The political uncertainty that dragged down global stocks and commodities also sent palm oil futures to a 2.8 percent year-to-date loss, compared to a more-than-5-percent gain just a week ago.
"Palm is not spared from the broad-based selling as commodities including crude oil, gold, silver, soybeans and soybean oil are all dropping," said a trader with a foreign commodities brokerage in Malaysia.
"People are just getting out the market. External factors are putting on a lot of pressure."
Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange lost 3.9 percent or 124 ringgit to close at 3,085 ringgit ($990) per tonne. Prices earlier hit a low at 3,052 ringgit, a level last seen on Feb. 2.
Traded volumes stood at 63,019 lots of 25 tonnes each, more than double the usual 25,000 lots as traders rushed in to liquidate their positions.
In the latest development of an upcoming listing of Malaysian palm oil firm Felda Global Venture Holdings (FGVH), Fidelity Investments and Hong Kong's Value Partners have agreed to be cornerstone investors. [ID:nL4E8GG12W]
Commodities group Louis Dreyfus said on Monday it agreed to take a minority stake in Felda, conditional on a successful June stock market float. [ID:nL5E8GEHGX]
REGIONAL EQUITY- BANGKOK, May 16 (Reuters) - Shares in Philippines and Malaysia suffered their biggest daily loss in seven months on Wednesday as equity markets in southeast Asia followed a broad global selloff, touched off by worries that the euro zone's debt crisis would worsen.
The Philippine index <.PSI> finished down 2.3 percent at 4,864.23 while Malaysia's main share index <.KLSE> ended down 1.6 percent at 1,536.04.
Fears of a Greek exit from the euro zone gripped financial markets and traders warned of further weakness ahead.
"Our base case is that, we think it's a short term risk, we expect euro to be supported later on and you will still see weakness for a few weeks on the global market," said CIMB regional strategist Chang Chiou Yi.
"Southeast Asia had outperformed, especially for markets like the Philippines and Thailand. So these markets tend to see more fallout ... This short term risk aversion could continue for a week or so," she said.
