By Justin Carrigan May 11 (Bloomberg) -- The euro lost all of yesterday’s gains on concern the $1 trillion bailout will hurt European economic growth. Stocks fell, paring the MSCI World Index’s biggest advance in a year. Chinese shares entered a bear market. The euro weakened 0.5 percent against the dollar at 9:35 a.m. in New York, trading below the level it was before the European Union-led aid package was announced early yesterday. The Stoxx Europe 600 Index fell 1.7 percent, after rising 7.2 percent yesterday. The Standard & Poor’s 500 Index dropped 0.9 percent. Copper, zinc, aluminum and led fell more than 1.5 percent to lead commodities lower. The European Union’s unprecedented bailout package is unlikely to be a “long-term solution” for the region, Marek Belka, the director of the International Monetary Fund’s European department, said in Brussels yesterday. Inflation in China accelerated to an 18-month high, the nation’s statistics bureau said today, increasing pressure on the government to raise interest rates in an economy that has been an engine of growth through the global financial crisis. “The euphoria of 24 hours ago has passed,” Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London, wrote in a report today. “We are in little doubt that steps taken will offer the euro little support and the aid package does not change the fact that Spain and Portugal in particular will still have to undergo further painful austerity measures.” Yen, Treasuries Gain The euro fell against 11 of its 16 most-traded peers, dropping as low as $1.2667, compared with the $1.2755 level at which it closed last week. The yen strengthened against all 16 of its major counterparts as investors sought the relative safety of the Japanese currency. The dollar advanced versus 14. The S&P 500 erased about a quarter of yesterday’s 4.4 percent rally, which was the biggest advance since March 2009. The benchmark gauge for U.S. equities is down 5.6 percent from its 2010 high on April 23. To contact the reporter for this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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