US Stocks Mixed as European Debt Crisis Festers

US stocks mixed as European debt crisis festersBy DANIEL WAGNER

Crisis-weary investors scoffed Monday at what had appeared to be a hopeful turn in the European debt crisis: a victory for pro-Europe parties in a Greek election. U.S. stocks were little changed, and borrowing costs for Spain surged to alarming levels.

Investors appeared fed up with policy makers' inability to resolve a crisis that has bedeviled markets for more than three years. Leaders of the most developed countries are meeting in Mexico to discuss the crisis and the slowing global economy.

Spanish borrowing rates spiked Monday above levels that forced other countries to take bailouts, a sign that bond investors fear Spain will default on its debts.

On Sunday, Greek voters elected a party that wants to continue a regime of international bailouts that hinge on painful budget cuts. Traders had fretted for weeks that a radical leftist party would prevail and reject Europe's unpopular bailout plan.

The next step, they feared, would be Greece's dropping the shared currency. Anxiety over a Greek exit was so pronounced that many expected a run on banks Monday if political parties opposing a fiscal bailout had won the election.

Yet Greece's situation remained precarious. The anti-bailout party got a big chunk of the vote. There's also no guarantee that the winners will be able to form a government. Elections a month earlier had not produced a governing coalition, leading to Sunday's do-over.

Many had expected stocks and other risky investments to rally on relief that the conservative party won. But the broader scope of Europe's financial burdens soon overshadowed whatever breathing room the election in Greece provided.

Safe investments rose and riskier ones fell as traders continued to their long vigil for a more permanent solution.

The Dow Jones industrial average was down 16 points at 12,751 in the first hour of trading. Hewlett-Packard (HPQ) fell 38 cents to $21.25, the biggest drop among the 30 stocks in the Dow.

The Standard & Poor's 500 index inched up half a point to 1,343. The Nasdaq composite rose 12 to 2,885.

European stocks were mixed. Benchmark indexes plunged 2.6 percent in Spain and Italy. Germany's market edged up 0.5 percent Britain's rose 0.2 percent.

The yield on the 10-year Treasury note fell to 1.58 percent from 1.63 percent earlier Monday as demand increased for low-risk assets.

The yield on Spanish 10-year bonds jumped to 7.15 percent, a new high since Spain joined the euro. Only a week ago, Europe unveiled a massive bailout of Spain's banks intended to reassure investors about the nation's finances.

Greece, Ireland and Portugal needed bailouts after their borrowing costs rose above 7 percent. It looks like tiny Cyprus will need a bailout as well.

Attention appeared to shift Monday toward Spain and Italy, both of which will require international help if they can't convince bond investors that their finances are sound.

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