By Stephen Kirkland June 15 (Bloomberg) -- Stocks slid, erasing most of yesterday’s rally, and commodities sank after manufacturing in New York unexpectedly contracted and the U.S. cost of living increased more than forecast. The euro weakened as officials failed to agree on a rescue plan for Greece and Treasuries rose. The Standard & Poor’s 500 Index fell 0.9 percent to 1,276.22 at 9:41 a.m. in New York after rallying 1.3 percent yesterday. The Stoxx Europe 600 Index slid 1 percent. Oil slipped 0.4 percent and the S&P GSCI Index of commodities retreated 0.7 percent. The euro lost 1 percent to $1.4292, the cost of insuring Greek and Portuguese debt rose to records and ten-year Treasury yields fell four basis points to 3.06 percent. The S&P 500 halted its rebound from a three-month low as economic data spurred concern inflation is accelerating as economic growth slows. The Federal Reserve Bank of New York’s general economic index dropped to minus 7.8, the lowest level since November. An emergency session of finance ministers ended with no progress on a new aid package for Greece, German Finance Minister Wolfgang Schaeuble told reporters yesterday. Financial, industrial and consumer companies led declines in nine of 10 industry groups in the S&P 500. The Fed’s gauge for the New York region was forecast at 12, according to a Bloomberg survey. Readings less than zero signal contraction in the so-called Empire State Index that tracks the New York region. Separate data showed industrial production, or output at factories, mines and utilities, rose 0.1 percent. Economists projected a 0.2 percent gain, according to the median estimate in a Bloomberg News survey. Factory production climbed 0.4 percent, led by business equipment output. Economic Data The consumer-price index increased 0.2 percent, compared with the 0.1 percent median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.3 percent, the biggest increase since July 2008. Owens-Illinois Inc., the world’s biggest maker of glass bottles, sank 9.2 percent after lowering its forecast for second-quarter profit margin because of higher costs and weaker demand in Australia, where it may idle a glass furnace. Scotts Miracle-Gro Co. declined 5.1 percent as the maker of lawn-care products cut its earnings forecast for 2011. Three stocks fell for every one that gained in the Stoxx 600, with banks leading losses. National Bank of Greece SA slid 6.4 percent and Banco Comercial Portugues SA sank 3.6 percent. BNP Paribas SA, Societe Generale SA and Credit Agricole SA may have their debt ratings cut because of their investments in Greece, Moody’s Investors Service said today. Shares of each bank slipped at least 1.4 percent. Euro Weakens The euro fell against all but one of its 16 most-traded counterparts, slipping 0.6 percent versus the yen. EU finance ministers meeting in Brussels yesterday agreed to convene again on June 19, a day earlier than planned. Talks may drag on into July, Luxembourg’s Finance Minister Luc Frieden said. The Dollar Index rose 1.1 percent. The pound fell 0.8 percent against the U.S. currency after U.K. jobless claims jumped more than economists expected in May and wage growth slowed. Australia’s dollar gained 0.3 percent versus the yen and 0.8 percent against the euro. Reserve Bank of Australia Governor Glenn Stevens reiterated that policy makers will need to raise interest rates at some stage and signaled inflation data next month may be key for such a decision. Greece Protests The yield on the Greek 10-year bond climbed 49 basis points, rising for the seventh day, as protesters in Athens threatened to surround Parliament, where lawmakers began to debate budget cuts and asset sales that are conditions for aid. The extra yield investors demand to hold the securities instead of benchmark German bunds rose to a record 1,487 basis points. Default swaps on Greece jumped 93 basis points to 1,698 and Portugal’s were up 21 basis points at 775, according to data provider CMA. That helped drive the cost of insuring sovereign debt higher, with the Markit iTraxx SovX Western Europe Index on 15 governments increasing seven basis points to 218.5. Portugal’s 10-year yield fell for the first time in seven days, while the yield on the two-year note jumped 32 basis points. Borrowing costs dropped at the sale of 1 billion euros ($1.4 billion) of three- and six-month bills. Germany auctions two-year notes. The S&P GSCI index of 24 raw materials declined 1 percent. Oil sank $1.08 at $98.29 a barrel in New York. The MSCI Emerging Markets Index lost 0.2 percent. The Shanghai Composite Index fell 0.9 percent after the central bank ordered domestic lenders yesterday to hold more cash in reserve. The Bombay Stock Exchange Sensitive Index slipped 1 percent before an interest-rate decision tomorrow. Turkey’s ISE 100 Index slid 1.5 percent after Haberturk newspaper reported savings-deposit insurance may increase. --With assistance from Claudia Carpenter, Andrew Rummer, Michael Shanahan and Dan Tilles in London. Editors: Michael Regan. CN CN CN CN CN To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net. To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net

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