NEW YORK (Reuters) – World equities faltered on Wednesday, dashed by a downturn in U.S. technology stocks and a return of investor skittishness after Swiss measures to halt the franc's rise frustrated investors seeking harsher steps.
The turn in sentiment was marked by a sharp reversal in the U.S. Treasury market, where prices for the benchmark 10-year note shot up, pushing its yield down to 2.18 percent. Gold prices also reversed course and turned lower.
The U.S. dollar, meanwhile, dropped across the board, hurt by sharp losses versus the franc, which strengthened even after the Swiss National Bank announced a series of measures to halt the currency's steady appreciation.
The plight of the franc was part of a larger battle over the European debt crisis, with the Swiss currency a beneficiary of investors seeking safety in a currency other than the euro.
"You're pitting an economy with less than 8 million people (Switzerland) against the euro zone, with a population of 338 million," said Greg Anderson, senior currency strategist at Citigroup.
"If euro zone investors want to buy the Swiss franc because they don't feel safe, there's nothing the Swiss can do about it," he said.
The euro tumbled more than 2 percent against the franc in volatile trade to hit a low of 1.12248 francs as safe-haven demand for the Swiss currency resumed. The single currency was last at 1.14060 francs, down 0.5 percent.
The dollar fell against a basket of major currencies, with the U.S. Dollar Index off 0.42 percent at 73.696.
U.S. stocks turned south at midday. The Nasdaq fell 1 percent and shares of Dell Inc slumped 10 percent a day after the world's second-largest PC maker slashed its full-year revenue forecast, citing weak technology spending.
Shortly after 1 p.m. EDT, the Dow Jones industrial average was down 34.21 points, or 0.30 percent, at 11,371.72. The Standard & Poor's 500 Index was down 2.08 points, or 0.17 percent, at 1,190.68. The Nasdaq Composite Index was down 19.53 points, or 0.77 percent, at 2,503.92.
Global stocks, as measured by MSCI's all-country world equity index, gained 0.1 percent.
The sharp turn in markets came after European equities closed at their highest level in more than a week as investors trained their sights on company earnings and attractive equity valuations following a dismal opening. A Franco-German meeting on Tuesday failed to appease investors.
"Volatility remains the fundamental theme of the markets at the moment. But there is still a lot to be positive about, given where valuations are and as balance sheets look very healthy and companies are awash with cash," said Henk Potts, equity strategist at Barclays Wealth.
Oil jumped to above $111 a barrel, the highest in almost two weeks, on a larger-than-expected decline in U.S. gasoline supplies.
The U.S. government's Energy Information Administration confirmed an industry report of a larger-than-expected drop in gasoline supplies. But it also showed a surprise increase in crude inventories.
Brent crude rose 2.0 percent to $111.31 a barrel, while U.S. light sweet crude oil rose 96 cents to $87.61 a barrel.
Spot gold prices fell 20 cents to $1,784.80 an ounce.
(Reporting by Gertrude Chavez-Dreyfuss, Karen Brettell and Rodrigo Campos in New York; Jessica Mortimer, Ana Nicolaci da Costa, Alex Lawler and Amanda Cooper in London; Writing by Herbert Lash; Editing by Dan Grebler)
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