NEW YORK, May 20 — The euro and European government debt rallied yesterday, lifted by a Franco-German proposal to fund grants for regions hit hardest by the coronavirus pandemic, while oil traded mostly higher on growing demand as countries eased business lockdowns.

A gauge of global equity markets retreated late in the session after Wall Street skidded on a report from medical news website STAT that said Moderna Inc did not provide enough critical data to assess its potential Covid-19 vaccine.

Moderna shares closed down 10.4 per cent after surging 20 per cent on Monday when it said a small-early stage trial showed promising results, news that rallied equity markets around the world.

Gold prices rose as some investors sought the safe-haven asset on recession fears after a 30.2 per cent decline in US housing starts in April, the biggest percentage drop on record.

Permits for future construction tumbled, adding to data showing the pandemic will drive the deepest US economic contraction in the second quarter since the Great Depression.

The euro rose 0.05 per cent to US$1.0918 (RM4.75), paring gains on the Franco-German plan for a €500 billion (RM2.3 trillion) European Union recovery fund was announced on Monday.

“The Franco-German proposal represents a material step forward towards harnessing joint fiscal capacity to provide sustained fiscal stimulus to support the economic recovery,” said Lee Hardman, currency analyst at MUFG.

Spanish and Portuguese government bond yields fell after a big drop in Italian yields on Monday.

Europe’s STOXX 600 index slipped 0.61 per cent after the worldwide surge in equity markets on Monday. But MSCI’s gauge of stocks across the globe shed 0.21 per cent.

On Wall Street, the Dow Jones Industrial Average fell 390.51 points, or 1.59 per cent, to 24,206.86. The S&P 500 lost 30.97 points, or 1.05 per cent, to 2,922.94 and the Nasdaq Composite dropped 49.72 points, or 0.54 per cent, to 9,185.10.

Federal Reserve Chair Jerome Powell told US lawmakers that the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in March was “critical” to the Fed’s ability to expand credit to offset the economic blow from the coronavirus.

US Treasury yields were lower. The benchmark 10-year yield slid 4.9 basis points to 0.6931 per cent.

Crude oil prices traded higher most of the session but Brent eased toward the end.

US crude rose 68 cents to settle at US$32.50 (RM141.33) a barrel, while Brent fell 16 cents to settle at US$34.65 a barrel.

US gold futures settled 0.6 per cent higher at US$1,745.60 an ounce. — Reuters