June 23 (Bloomberg) -- Stocks, U.S. index futures and oil fell and the euro weakened for a second day against the dollar after America’s jobless claims exceeded estimates and European Central Bank President Jean-Claude Trichet said the debt crisis threatens to infect banks. Treasuries rallied. The MSCI All-Country World Index dropped 1.2 percent at 8:55 a.m. in New York. Standard & Poor’s 500 Index futures slipped 1.1 percent. Crude oil in New York tumbled 4.2 percent. The euro declined 1.3 percent to $1.4165 and depreciated to less than 1.20 Swiss francs. The 10-year Treasury yield slid seven basis points to 2.91 percent, while the yield on similar- maturity Portuguese securities increased 24 basis points to 11.38 percent. Sovereign debt risk surged to a record. Applications for jobless benefits increased 9,000 in the week ended June 18 to 429,000, Labor Department figures showed. Risk signals for financial stability in the euro area are flashing “red,” Trichet said late yesterday in Frankfurt. “We are seeing a very slow second half of the year recovery,” Patrick Legland, global head of research at Societe Generale SA in Paris, said in a Bloomberg Television interview with Francine Lacqua. “Markets are extremely worried” about Europe’s debt crisis, he said. Federal Reserve Chairman Ben S. Bernanke said the recovery is progressing “more slowly” than expected as policy makers yesterday kept a pledge to leave interest rates near zero and complete a $600 billion bond-purchase program this month. Home Sales The retreat in S&P 500 futures indicated the gauge will drop for a second day. A Commerce Department report at 10 a.m. in Washington may show purchases of new U.S. houses fell 4 percent to a 310,000 annual rate last month, according to the median forecast of 67 economists surveyed by Bloomberg. The yield on the 30-year Treasury bond declined two basis points. The U.S. plans to sell $7 billion of similar-maturity Treasury Inflation Protected Securities. The Stoxx Europe 600 Index declined 1.4 percent, with more than 14 shares slipping for every one that gained. European services and manufacturing growth slowed more than economists forecast in June, a report by London-based Markit Economics showed today. Bayer AG plunged 6.6 percent as a rival to its Xarelto blood thinner prevented more strokes with less major bleeding than an older medicine in a study. Mediaset SpA, the broadcaster controlled by Italian Prime Minister Silvio Berlusconi, sank 6.8 percent after forecasting that advertising will decline. The euro slid against 13 of its 16 major currencies monitored by Bloomberg, depreciating 0.9 percent versus the yen. The Dollar Index, which tracks the U.S. currency against those of six trading partners, climbed 1.2 percent. The pound weakened 0.6 percent to $1.5968, falling below $1.60 for the first time since April 1. Brussels Meeting The yield on the Greek two-year note jumped 36 basis points, climbing for the second consecutive day. European ministers meet in Brussels today and tomorrow to debate the size of new loans to Greece and how to get holders of the nation’s debt to contribute. Default swaps on Greece rose 25 basis points to 2,012, signaling an 82 percent chance of default within five years, according to CMA. The extra yield investors demand to hold Portuguese 10-year bonds instead of benchmark German bunds increased 34 basis points, approaching the widest on record. The yield on Spain’s 10-year security advanced nine basis points, with the Italian yield four basis points higher. Default Risk The Markit iTraxx SovX Western Europe Index of default swaps on 15 governments jumped 13 basis points to 237. Portugal’s climbed nine basis points to 791 and contracts on Spain rose four to 289, while those for Ireland increased 12 basis points to 767 and Italy’s were five basis points higher at 187. Oil in New York sank $3.96 to $91.45 a barrel and Brent crude in London declined 3.8 percent to $109.86 a barrel. The S&P GSCI index of 24 commodities fell 2.9 percent, the most in a week. The MSCI Emerging Markets Index fell 0.9 percent, heading for its first decline in three days. Russia’s Micex Index slipped 1.1 percent, South Africa’s benchmark gauge lost 1.5 percent and South Korea’s Kospi Index slid 0.4 percent. Hungary’s BUX Index sank 2 percent after Goldman Sachs Group Inc. cut its price estimate for Mol Nyrt., the country’s largest oil refiner, and the telecommunications watchdog called on Magyar Telekom Nyrt. to change the terms of its contracts with mobile-phone clients to avoid “shocking bills.” Turkey’s lira slipped 1 percent, extending earlier declines, after the central bank left interest rates unchanged at a record low. --With assistance from Claudia Carpenter, Adam Haigh, Andrew Rummer, Michael Shanahan, Dan Tilles and Jason Webb in London. Editors: Stephen Kirkland, Stuart Wallace To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net. To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net

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