World Stock Index Declines for Sixth Day; Greek Bonds Plunge

Greek bonds declined after the Finance Ministry in Athens denied a Financial Times report that it plans to sell 25 billion euros ($35 billion) of debt to China as the government struggles to cut the largest budget deficit in the European Union.

The Markit CDX North America Investment Grade Index rose in its first increase this week, climbing 2 basis points to 96 basis points as of 10:05 a.m. in New York, according to broker Phoenix Partners Group. The index, a benchmark gauge of credit risk that’s linked to 125 companies, rises as investor confidence deteriorates.

Traders are buying protection against defaults on sovereign debt at more than five times the pace of company bonds, as governments fund ballooning deficits. The net amount of credit- default swaps outstanding on 54 governments from Japan to Italy jumped 14.2 percent since Oct. 9, compared with 2.6 percent for all other contracts, according to Depository Trust & Clearing Corp. data. European countries led the increase, with the amount of protection on Portugal rising 23 percent, Spain 16 percent and Greece 5 percent.

The early 2010 gold rally has flatlined with worries of a Greek default on soverign debts. This is giving the dollar more strength against other paper currencies. As uncertainty mounts over Greece, expect the dollar to continue its gains and gold to soften a bit. The long term outlook for gold is still strong though as our leadership in Washington still has shown no serious attempt at reducing its deficit.