World stocks slipped on Thursday after U.S. Senate Majority Leader Harry Reid said the United States may be poised to go off the “fiscal cliff,” while the yen hit a two-year low on expectations of aggressive monetary stimulus.
Reid, a Democrat, criticized Republicans for refusing to go along with any tax increases as part of a U.S. budget remedy and said the economy seemed to be heading over the “fiscal cliff” of impending tax hikes and spending cuts.
Economists warn that the $600 billion in higher taxes and spending cuts set to kick in from January could push the world’s largest economy into recession, dragging other countries with it.
In another session driven by headlines on the budget talks, all three major U.S. indexes fell more than 1 percent following Reid’s comments. But they sharply cut losses in late-session trading as the U.S. House of Representatives set a work session for Sunday ahead of the Dec. 31 deadline for reaching a deal.
On Wall Street, the Dow Jones industrial average was down 16.30 points, or 0.12 percent, at 13,098.29, well off its lows. The Standard & Poor’s 500 Index was down 1.66 points, or 0.12 percent, at 1,418.17. The Nasdaq Composite Index was down 3.33 points, or 0.11 percent, at 2,986.83.
Shares of U.S. retailers fell for a second day following the Christmas holiday. The Morgan Stanley retail index was down 0.4 percent.
The MSCI global index was last down 0.1 percent, while European shares ended down 0.04 percent.
