US Markets

U.S. stocks fell but finished above session lows, as weak manufacturing data and worries of potential downgrades to the U.S. credit rating overpowered investor relief over the weekend's debt-ceiling deal. The Dow Jones Industrial Average shed 10.75 points, or 0.09%, to 12132.49, in a volatile session that saw the measure briefly fall below 12000 for the first time since late June.

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En route to its seventh straight decline, the blue-chip index had risen as much as 139.18 points immediately after the open, as investors expressed relief at the compromise hammered out late Sunday to raise the U.S. debt ceiling. But stocks turned negative after a reading on manufacturing in July showed barely any growth and renewed worries about the health of the U.S. economy.

The Dow fell by as much as 145.16 points midsession. The action added to the index's biggest weekly point decline since May 2010, which came as investors fretted last week that Washington had run out of time to meet the government's spending obligations past Aug. 2. The Standard & Poor's 500-stock index lost 5.34 points, or 0.41%, to 1286.94, for the sixth straight decline, with all sectors except utilities and telecommunications losing ground.

The Nasdaq Composite shed 11.77 points, or 0.43%, to 2744.61, its fifth drop in the last six sessions. The weak manufacturing data was a rebuke to investors who have been anticipating that the soft patch this year and the aftereffects of Japan's earthquake and tsunami would give way to stronger growth in the second half.

Meanwhile, despite a hard-fought pact to raise the debt ceiling that was due for a vote in both chambers of Congress late Monday, investors continued to eye Washington debt-ceiling headlines with caution. Health-care stocks were the S&P 500's weakest performers after Medicare said it will cut payment rates to skilled nursing facilities by 11.1% next fiscal year, sending shares of health-care providers tumbling. The decision adjusts for what the Centers for Medicare & Medicaid Services said was an unexpected rise in nursing-home payments this fiscal year. Kindred Healthcare slumped 29%, while Sun Healthcare Group plunged 52% and Skilled Healthcare Group lost 42%. Sunrise Senior Living lost 2.8%. Merck and Home Depot shed 2% to lead the blue-chip decliners.

European Markets

European stock markets fell, reversing gains inspired by a tentative agreement to raise the U.S. government's debt ceiling, after another dose of disappointing data highlighted fears about the country's fragile economic recovery. The broad-based Stoxx Europe 600 index tumbled 1.2% to finish at 262.02, after earlier reaching a session high of 268.01.

Wall Street also shed opening gains to turn negative as the Institute for Supply Management's manufacturing gauge in July dropped 4.4 points to 50.9, well below economists' expectations of 54.3. That negativity fed through to European markets, which were already headed south on jitters that a U.S. debt deal hammered out over the weekend may not pass Congress.

In addition, the euro-zone manufacturing purchasing managers' index fell to 50.4 in July, from 52.0 in June, in line with expectations. U.K. PMI manufacturing data showed a contraction in July, while in Asia, China's PMI fell to 50.7 in July from 50.9 in June, indicating that manufacturing activity growth continued to ease as a result of Beijing's tightening measures. In London, the FTSE 100 index fell 0.7% to 5774.43 as most financial stocks slid on worries about the U.S. debt vote.

Royal Bank of Scotland Group and Lloyds Banking Group sank 4.3% and 5%, respectively. But heavyweight HSBC Holdings added 2.2% after posting a 35% gain in first-half net profit and saying it will cut 30,000 jobs. Its pretax profit rose 3.3%, topping forecasts. Declines were most pronounced in stock markets at the edge of Europe.

Analysts cited rising bond yields there in addition to concerns about passage of the U.S. debt deal. Spain's IBEX 35 index slid 3.2% to 9318.20; BBVA dropped 4.7%. Italy's FTSE MIB index declined 3.9% to 17720.44, with shares of Banco Popolare SC skidding 7.7%. The French CAC 40 index fell 2.3% to 3588.05, while the German DAX 30 index slid 2.9% to 6953.98. Deutsche Bank dropped 3.9% and Commerzbank fell 5.2%, while BNP Paribas dropped 3.9% and Societe Generale declined 4.1%.

Asian Markets

Most Asian markets jumped Monday as U.S. President Barack Obama's announcement of a framework agreement to lift the nation's debt ceiling and avert a sovereign default sparked a relief rally. Japan's Nikkei Stock Average ended the day 1.3% higher at 9,965.01, South Korea's Kospi gained 1.8% to 2,172.31, and the Hang Seng Index finished 1% higher at 22,663.37 in Hong Kong.

China's Shanghai Composite inched up 0.1% to end at 2,703.78, while Taiwan's Taiex finished 0.7% higher at 8,701.38. Both benchmarks lagged the region after data released by HSBC showed manufacturing activity contracted in both markets in July, with the performance in Taipei also weighed by sharp losses in Formosa Plastics Group firms after a weekend fire at a refining complex of Formosa Petrochemical Corp. HSBC reported Monday that its China manufacturing purchasing managers' index fell to 49.3 in July from 50.1 in June.

A separate, official survey by the China Federation of Logistics and Purchasing earlier in the day showed the nation's PMI slipped to 50.7 in July from 50.9 in June, but remained above the threshold of 50, indicating an expansion. HSBC data also showed Taiwan's PMI fell to 46.1 in July from 49.9 in June. Banks were among the best performers around the region, with Sumitomo Mitsui Financial Group Inc. up 2.9% in Tokyo.

Exporters also climbed, with South Korea's Samsung Electronics Ltd. rising 3.1% and Japan's Honda Motor Co. up 1.5%. Shares in the region's energy producers advanced as crude-oil prices climbed on the U.S. debt agreement news. Inpex Corp. added 0.7% in Tokyo, while Cnooc Ltd. advanced 0.9% and PetroChina Co. rose 1.6% in Hong Kong.

Base Metals

Copper reversed earlier gains to settle at its lowest closing price in three weeks on the London Metal Exchange Monday after disappointing U.S. manufacturing data further dented confidence in the U.S. economy. At the close, LME three-month copper traded 1.8% lower at $9,649.50 a metric ton, its lowest close since July 11. Tin fared the best, closing alone in positive territory at $28,100/ton, up 0.02%.

Crude futures fell Monday in a broad market reversal as weak U.S. manufacturing data reignited concerns about slowing growth in the world's largest oil consumer. Light, sweet crude for September delivery settled 81 cents, or 0.9%, lower at $94.89 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange closed 14 cents higher at $116.88 a barrel. Oil futures fell after a fall in the Institute for Supply Management's manufacturing purchasing managers' index. The data, coupled with a dour report Friday on U.S. gross domestic product, suggest the economy is hitting the brakes harder than many economists expected only weeks ago.

Gold futures fell as the U.S. debt-limit deal reached over the weekend eased investor demand for a safe haven, but the weaker than expected U.S. manufacturing reading limited losses. The most actively traded contract, for December delivery, fell $9.50, or 0.6%, to settle at $1,621.70 a troy ounce on the Comex division of the New York Mercantile Exchange

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