Stocks: Thursday’s review

European stocks fell for a second day as reports showed that sales of previously owned houses dropped and more Americans than forecast filed claims for unemployment benefits.

Stocks initially rallied after Spain sold 2.54 billion euros of two- and 10-year bonds at an auction, meeting the government’s maximum target of 2.5 billion euros. France also raised 10.5 billion euros of debt out of a planned 11 billion euros today as risks linked to the country’s presidential election drove up yields.

Both countries have come under increased scrutiny from investors as the effect of the European Central Bank’s longer- term refinancing operation fades. The ECB has injected 1 trillion euros of liquidity into the region’s financial system.

The yield on Spain’s benchmark 10-year bond has jumped as much as 1 percentage point since the beginning of March, while the yield on the equivalent French security has gained about 10 basis points.

National benchmark indexes fell in 14 of the 17 western- European markets that were open today. France’s CAC 40 Index declined 2.1 percent and Germany’s DAX Index declined 0.9 percent. The U.K.’s FTSE 100 Index lost less than 0.1 percent. Spain’s IBEX 35 Index retreated 2.4 percent to extend a three- year low.

Publicis sank 4.1 percent to 38.48 euros in Paris. The company said sales growth will slow after it lost a contract for General Motors Co. and as some clients cut spending. First- quarter sales rose 13 percent to 1.45 billion euros from a year earlier, Publicis said. Excluding acquisitions, sales grew 4.1 percent.

Nokia declined 3.6 percent to 2.92 euros, its lowest price since 1997, after the company reported a first-quarter operating loss, burdened by costs at the unprofitable equipment venture with Siemens AG.

Ladbrokes Plc, the second-biggest U.K. betting group, soared 6.5 percent to 173.4 pence after predicting profit growth in its digital offering in the second half of 2012.

U.S. stocks retreated for a second day as disappointing economic data and concern over Europe’s debt crisis overshadowed better-than-forecast earnings from companies.

The S&P 500 fell after reports showed sales of previously owned U.S. homes in March unexpectedly fell, while more Americans than forecast filed applications for unemployment benefits last week. Another report showed manufacturing in the Philadelphia region expanded at a slower pace in April as orders and sales cooled.

Global equities also declined as yields on French and Spanish 10-year bonds climbed at least six basis points, reviving concern about the sovereign debt crisis. Spain sold 2.54 billion euros ($3.3 billion) of two-year and 10-year debt today, compared with a maximum target of 2.5 billion euros. France auctioned 8 billion euros.

Dow 12,964.10     -68.65 -0.53%, Nasdaq       3,007.56       -23.89 -0.79%, S&P 500    1,376.92       -8.22         -0.59%

Alcoa (АА), the largest U.S. aluminum producer, erased 1.9 percent to $9.76. DuPont (DFT), the most valuable U.S. chemicals producer, slid 1.2 percent to $52.61 after reporting sales volume fell 2 percent in the first quarter, led by declines in the electronics unit and in the Asia Pacific region.

Bank of America Corp. (BAC) slid 1.7 percent to $8.77 after earlier rising as much as 2.8 percent. The second-largest U.S. lender said first-quarter profit rose amid a rebound in trading and better credit quality.

Morgan Stanley climbed 2.3 percent to $18.07. Stock- and bond-trading revenue rose more than at any other major U.S. bank. Profit was 71 cents a share excluding accounting charges, topping the 44-cent average estimate of 17 analysts.

Travelers Cos. (TRV) advanced 3.8 percent, the most in the Dow, to $61.70 as earnings beat analysts’ estimates and the company boosted its dividend 12 percent.