* Global stocks fall on U.S. 'fiscal cliff' uncertainty
* Trading light ahead of early holiday close
* Crude oil lower, yen drops after comments from premier
NEW YORK, Dec 24 (Reuters) - The yen tumbled on Monday in an
otherwise quiet day as a continued deadlock in U.S. budget talks
left an undercurrent of uncertainty in markets ahead of the
Volume was light going into the holiday, with many traders
already out on vacation. The U.S. stock and bond markets closed
early, while a number of global markets, including those in
Germany and Italy, were closed.
The major mover was the yen, which fell to 20-month
lows after incoming premier Shinzo Abe renewed pressure over the
weekend on the Bank of Japan to adopt a 2 percent inflation
target. The dollar rose 0.7 percent against the yen.
The FTSEurofirst300 closed down 0.1 percent while
the MSCI index of global stocks was slightly
lower, down 0.2 percent.
Global equities have been pressured by the political
stalemate with respect to the U.S. "fiscal cliff," a combination
of tax hikes and spending cuts scheduled to take effect next
year. Investors fear that if no deal is reached, it could push
the U.S. economy into recession, severely hurting global growth.
Some U.S. lawmakers expressed concern on Sunday that the
country would go over the cliff, and some Republicans charged
that was President Barack Obama's goal. Talks are stalled with
Obama and House of Representatives Speaker John Boehner out of
Washington for the holiday.
"This will continue to erode confidence and continue to
cause problems," said Joe Saluzzi, co-manager of trading at
Themis Trading in Chatham, New Jersey. "I am sure they will come
up with some patch like they always do... but it's concerning
that they can't get their stuff together."
Although there is no official date for talks to resume, the
two sides still have a few days after Christmas to find a
compromise before the Jan. 1 deadline when the measures start to
The Dow Jones industrial average ended down 51.76
points, or 0.39 percent, at 13,139.08. The Standard & Poor's 500
Index was down 3.49 points, or 0.24 percent, at 1,426.66.
The Nasdaq Composite Index was down 8.41 points, or 0.28
percent, at 3,012.60.
Currency markets were largely quiet. Against the backdrop of
the "fiscal cliff" uncertainty, the dollar was less than
0.1 percent higher against a basket of major currencies while
the euro was flat.
Activity in other assets was also subdued, with spot gold
edging off a four-month low and February crude
futures up 0.2 percent at $88.74 per barrel.
The benchmark 10-year U.S. Treasury note was
down 2/32, with the yield at 1.7772 percent.
For the year, the S&P 500 has risen about 13.5 percent. In
the face of the budget uncertainty, many investors may opt to
lock in gains for the year until there is resolution on that
The uncertainty over the U.S. budget is threatening to sour
what has been a strong second half of the year for equity
markets. The FTSEurofirst 300 is up 20 percent since June while
the Euro STOXX 50 has gained almost 30 percent. Both
indexes are set to post their best annual performances since the
post-Lehman crisis bounce of 2009.
Most European bond markets were already shut for Christmas.
One of the few to be open was in Britain, where benchmark
10-year yields ticked higher. Still, investors are showing
increasing appetite for European stocks. EPFR Global data
reported that flows into equity funds have increased for the
last 19 weeks.
"This year has been a year of transition, and now it's time
to turn the page and move on, to start picking stocks again for
the long term, companies exposed to the emerging consumer in
places like Asia and Africa," said David Thebault, head of
quantitative sales trading at Global Equities.
Others warn, however, that the euro zone crisis may still
have some bite left. Elections are due next year in Italy and
Germany, while Spain's government, companies and banks need to
refinance huge amounts of debt.
"Policymakers in Spain will not be looking forward to the
start of the year and January will probably be quite volatile in
Europe," said ABN Amro economist Aline Schuiling. "The funding
in the first quarter for Spain will be the test... Its deficit
is now roughly the same as Greece's."