By Hilary Russ
NEW YORK, Sept 28 (Reuters) – The U.S. dollar rose on Friday as the euro fell on deepening worries about an Italian budget with a higher-than-expected deficit target, which also slammed European stocks.
Wall Street ended flat, pulling back from early gains after Facebook disclosed a security breach. Tesla shares lost 13.9 percent after U.S. regulators sued Chief Executive Officer Elon Musk in a fraud complaint that seeks to remove him as CEO.
In Italy, the government on Thursday targeted a budget deficit of 2.4 percent of gross domestic product for the next three years, marking a victory for party chiefs over Economy Minister Giovanni Tria, an unaffiliated technocrat.
Although the deficit is within the prescribed EU limit of 3 percent of GDP, investors fear that Italy’s anti-establishment government is not committed to tackling its huge debt load. Italy’s debt-to-GDP ratio stands at about 130 percent, the second highest in the euro zone, behind Greece.
The pan-European FTSEurofirst 300 index lost 0.83 percent. Shares in Italian banks fell as much as 8.5 percent and closed 7.26 percent lower.
Italian government bonds were set for their worst day since a brutal May 29 sell-off, up 34-42 basis points across the curve.
The euro fell 0.31 percent to $1.1603. MSCI’s gauge of stocks across the globe shed 0.23 percent.
Wall Street in the morning rose, as the tech sector got a boost from gains in Nvidia Corp after Evercore raised the chipmaker’s share price target to $400.
The Dow Jones Industrial Average rose 18.38 points, or 0.07 percent, to 26,458.31, the S&P 500 lost 0.02 point, or -0.00 percent, to 2,913.98 and the