国际英语新闻：Tighter credit in Europe tied to stock market turmoil

In credit markets, the worries over Spain has helped push up the three-month London interbank offered rate, the interest rate at which banks are willing to lend money to each other, for the 11th consecutive day on Tuesday, to 0.536 percent, the highest rate since July 2009 and about double the rate at the beginning of this year.

Such a rise is generally seen as a sign of stress in the banking system, and according to the futures market, the rate could double again by December, helped higher by positive growth in the United States.

Since April, as nervousness over Europe has grown, the flight to safety has played out in markets around the world. Investors have sold emerging market bonds and relatively risky currencies like the Australian dollar. Many instead piled into Treasuries. “The bottom line is risk aversion has gone up,” said Adrian Cronje, chief investment officer of Balentine.

In the United States, the Dow Jones industrial average which had gone as low as 9,774.48, closed down 0.2 percent at 10,043.75. The Standard & Poor’s 500-stock index closed up 0.04 percent at 1,074.03.

The impact of all this on the U.S. economy is still an open question. Convulsions in Europe could have an effect on the economy by making borrowing more costly. Sharp appreciation of the dollar against the euro and a feared slowdown in European growth could hurt American exports.  Bernanke is scheduled to speak Wednesday in Tokyo at a conference sponsored by the Bank of Japan where his comments will be listened to with interest.

While investors are running to safety and displaying signs of pessimism, some have aired a little more optimism. In London, James Bullard, president of the Federal Reserve Bank of St. Louis, said he did not think the financial turmoil in Europe was likely to set off another global economic downturn.

“The U.S. may actually be an unwitting beneficiary of the crisis in Europe, much as it was during the Asian currency crisis of the late 1990s,” Bullard said. “This is because of the flight to safety effect that pushes yields lower in the U.S. Of course the U.S. also has its own fiscal problems that must be directly addressed in a timely manner if the nation is to maintain credibility in international financial markets.”