By Wanfeng Zhou
NEW YORK | Fri Oct 28, 2011 10:17am EDT
(Reuters) - U.S. and European stocks fell and the euro eased Friday as investors booked profits after the prior session's strong rally and a disappointing Italian debt auction showed investor confidence in Europe remained shaky despite the latest rescue deal.
Losses in stock markets boosted prices of safe-haven Treasuries, while oil prices declined more than 1 percent on uncertainties over the details of Europe's plan to tackle its debt woes.
In Italy's debt auction Friday, the country's 10-year borrowing costs topped 6 percent for the first time since the launch of the euro more than a decade ago. It was the first euro zone bond auction after policymakers struck a long-awaited agreement to slash Greece's debt burden and strengthen the European Financial Stability Facility, the region's rescue fund.
"The big news of the week was yesterday, and today we're seeing typical price action after that kind of move. We may see a consolidation over the next week, but then a sustained rally after that," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.
U.S. stocks fell in early trade. The Dow Jones industrial average .DJI was down 18.01 points, or 0.15 percent, at 12,190.54. The Standard & Poor's 500 Index .SPX was down 5.10 points, or 0.40 percent, at 1,279.49. The Nasdaq Composite Index .IXIC was down 9.74 points, or 0.36 percent, at 2,728.89.
The FTSEurofirst 300 .FTEU3 index of leading European shares dropped 0.3 percent to 1,017.06 points.
World stocks as measured by the MSCI index .MIWD00000PUS was flat at 317.88 -- having hit the highest level in nearly three months earlier in the day.
Markets paid little heed to U.S. government data showing consumer income grew by a sluggish 0.1 percent in September, and a separate report showing wages and salaries expanded 0.3 percent in the third quarter -- the smallest rise in a year.
Investors' focus is also shifting to a meeting of the Group of 20 nations next week in Cannes, France.
The euro slipped 0.3 percent to $1.4141, taking a breather from a rally Thursday which sent it to a seven-week high.
"Although we're getting somewhere with EFSF, the Italian auction shows the market is sending signals that the crisis hasn't been solved by a long shot," said Stephen Gallo, head of market analysis at Schneider FX.
Brent crude slipped $2.18 to $109.90. U.S. crude dropped $1.68 to $92.28.
The benchmark 10-year U.S. Treasury note was up 17/32, with the yield at 2.32 percent.
(Additional reporting by Angela Moon and Nick Olivari; Editing by Chizu Nomiyama)
