U.S. wavers; euro dives on Greece turmoil
— -- Stronger news about the U.S. economy stilled the ripples from Europe's latest political impasse Tuesday, pushing U.S. stocks between modest gains and losses.
The euro and European stocks plunged as trading in New York began after efforts to form a government in Greece collapsed. Newly-elected political leaders there disagree about whether to accept more international bailouts and continue with painful spending cuts.
In the U.S., stocks opened mixed then edged into small gains after word that confidence among U.S. builders rose to a five-year high in May. The index has risen for seven of the past eight months.
Stocks were also helped by a report of growth in retail sales for April and a survey by the New York Fed that found manufacturing activity in the New York region rebounded this month far more strongly than economists had expected.
Stocks are having their worst month in the past eight. For the month, the Dow is down 518 points — about 4% — after hitting a four-year high on May 1. The average is on track to post its first monthly loss since September, when it fell 6%.
If the Dow closes higher, it will be only its second up day since the peak reached on May 1.
The euro fell as low as $1.2752, a four-month low against the dollar, after Greek socialist leader Evangelos Venizelos declared that attempts to form a governing coalition there had failed and new elections will be held next month. If voters elect parties opposed to the terms of the country's financial rescue, Greece could be expelled from the euro and global markets would likely shudder.
Stock indexes in France, Britain and Germany gave up earlier gains after Venizelos' remarks and closed sharply lower. Stocks in Europe had been buoyed by the surprise news that eurozone economy did not fall into recession in the first quarter. Output was flat compared with the previous three-month period, better than the 0.2% drop analysts had been expecting.
"In the current context, zero growth in the eurozone in the first quarter is relatively good news," said Marie Diron, senior economic adviser at Ernst & Young. "It suggests that the economy is not falling off a cliff under the burden of fiscal austerity."
Asian markets fell earlier on Tuesday, with Japan's Nikkei 225 down 0.8% to 8,900.74, its lowest close since Feb. 3. South Korea's Kospi lost 0.8% to 1,898.96. Australia's S&P/ASX 200 lost 0.7% to 4,266.30.
Mainland Chinese shares extended their losses, with the Shanghai Composite Index hitting another three-month low, losing 0.2% to 2,374.90. But Hong Kong's Hang Seng, which some analysts said was oversold after more than a week of losses, rebounded 0.8% to 19,894.31.
Benchmark oil for June delivery was up 2 cents to $94.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.35 to settle at $94.78 in New York on Friday.
Among other stocks making big moves:
Pamela Sampson in Bangkok contributed to this report.