Portugal's credit downgrade pressured stock markets on Wednesday, reigniting fresh fears about euro zone debt just as concerns over Greece ebbed, while China's latest rate hike weighed on commodities, according to Reuters. Shares on Wall Street opened lower, joining European equity and credit markets, as Moody's downgrade of Portugal cast new doubt on European efforts to rescue distressed euro zone states without debt restructuring. Portugal's government bond yields hit lifetime highs, hammering the euro. China's central bank raised interest rates for the third time this year, making clear that taming inflation is a top priority as its economy slows. Copper fell as much as 1 percent in London while crude oil slipped half a percent. Gold, a safe haven, rose 0.7 percent. Analysts said risk aversion across financial markets highlighted the fragility of the global recovery. The two-year yield on Portuguese government debt surged more than 2 percentage points to a lifetime high of 15.77 percent, while the 10-year yield climbed more than 1 percentage point to 13.45 percent, also its highest ever. An hour after the start of trading on Wall Street, U.S. stocks were down slightly. The Dow Jones industrial average was off 4.70 points, or 0.04 percent, at 12,565.17. The Standard & Poor's 500 Index was down 4.40 points, or 0.33 percent, at 1,333.48. The Nasdaq Composite Index fell 8.26 points, or 0.29 percent, to 2,817.51. The FTSEurofirst 300 index tracking European shares and the MSCI world equity index, which follows global equities, both slipped about 0.3 percent. Investors were also shedding risky assets ahead of the European Central Bank's monetary policy announcement on Thursday. The ECB is all but guaranteed to raise interest rates by 25 basis points to 1.5 percent -- an encouraging development for the euro -- although markets remain uncertain on the timing of further rate moves by the central bank. The euro fell 0.7 percent on the day to a session low around $1.43021, extending losses from the previous day. Its losses versus the dollar boosted the greenback 0.4 percent against a currency basket. The euro's losses come as fears over Greece and Portugal are prompting investors to hunt for safer havens such as the Swiss franc and yen. Markets showed little reaction to U.S. data on the service sector reflecting a slight slowdown in growth in June, according to the Institute for Supply Management. The benchmark 10-year U.S. Treasury note was up 11/32, its yield at 3.0766 percent. -- SPA
