NEW YORK (Reuters) – Stocks fell on Friday, with the NYSE composite stock index turning negative for the year as Facebook Inc stumbled in its market debut and investors were cautious ahead of a G8 summit on the weekend expected to address Europe’s debt crisis.

The Dow Jones industrial average dropped 61.61 points, or 0.50 percent, to 12,380.88. The Standard & Poor’s 500 Index fell 6.90 points, or 0.53 percent, to 1,297.96. The Nasdaq Composite lost 20.81 points, or 0.74 percent, to 2,792.88.

(Reporting By Edward Krudy, editing by Dave Zimmerman)

SAN FRANCISCO (Reuters) – Facebook Inc shares rose less than expected on their first day of trade on Friday and huge order volume caused technical problems that marred the coming out party of the No. 1 online social network.

Its shares were up 8 percent in early afternoon trading on the Nasdaq, after opening 11 percent higher and then rapidly heading south to touch their initial public offering price of $38. The gains were below market forecasts of as much as a 50 percent jump.

“We have got some unhappy guys out there,” said Wayne Kaufman, chief market strategist at John Thomas Financial, a retail broker on Wall Street. “They were hoping for Facebook to be considerably better. I bet there are a lot of disappointed people in the market.”

Facebook, which has about 900 million users globally, priced its IPO at the top end of its target range, becoming the first U.S. company to go public with a valuation greater than $100 billion. If a greenshoe option to underwriters is exercised, Facebook will raise as much as $18.4 billion by selling an 18 percent stake, the second-biggest IPO in U.S. history after the one by Visa Inc.

Analysts blamed the poorer-than-expected first-day showing on the vast number of shares floated and market weakness. General Motors’ decision to pull paid-advertising from the social network, announced this week, also hurt.

After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the closely watched stock began trading at $42.05, rose to as high as $45 and then rapidly retreated. The Nasdaq exchange said it was investigating an issue with execution of trades.

Facebook’s IPO had been heavily oversubscribed, particularly by retail investors, despite concerns about slowing growth in the last quarter, whether the company can make money from mobile advertising, and the immense control Chief Executive Mark Zuckerberg has over on the company.

Others warned that the IPO price, equivalent to over 100 times historical earnings versus Apple Inc’s 14 times and Google Inc’s 19 times, makes Facebook a risky bet.

EARLY FANFARE

For Facebook, Friday began with much fanfare. To rapturous applause from employees, Mark Zuckerberg — flanked by Chief Operating Officer Sheryl Sandberg and Nasdaq Chief Executive Robert Greifeld — rang the bell to kick off trading at the company’s Silicon Valley headquarters at 6:30 a.m. Pacific time.

The 28-year-old billionaire founder, wearing his trademark black hoodie, hugged and high-fived Sandberg and other employees in celebration after he pressed the remote button.

The area outside Facebook’s offices was packed with throngs of photographers, more than a dozen television trucks, and a TV news helicopter hovering overhead as the excitement reached fever pitch.

The fizzling of Facebook’s early gains put pressure on other social media stocks. Zynga, which depends on Facebook for much of its revenue, dived 13 percent before it was halted. LinkedIn Corp was off 3 percent at midday.

“When you see what’s happening with other social media stocks today, which are significantly down, as well as looking at Facebook trading flat, we think it has traded obviously at the high end,” said Destination Wealth Management CEO Michael Yoshikami.

“It’s a rich valuation, particularly given the advertising pressure they’re under now. Advertising revenue has grown significantly slower over the past few years, and that’s punctuated by GM’s decision to stop advertising on Facebook.”

“We’re not buyers at $38, particularly considering that most of their business is in mobile and they haven’t figured out how to make money yet.”

(Additional reporting by Edwin Chan in San Francisco, Yinka Adegoke, Ed Krudy and Olivia Oran in New York; Editing by Steve Orlofsky and Tiffany Wu)

NEW YORK/SAN FRANCISCO (Reuters) – Facebook Inc shares opened 11 percent higher on Friday, after the pioneering online social network raised as much as $18.4 billion in one of the biggest initial public offerings in U.S. history.

After a delay in the opening print that drove up anxiety levels among traders and onlookers outside the Nasdaq, the company’s closely watched stock began trading at $42.05, compared with an IPO price of $38.

To rapturous applause from employees, Facebook Chief Executive Mark Zuckerberg — flanked by Chief Operating Officer Sheryl Sandberg and Nasdaq Chief Executive Robert Greifeld — rang the bell to kick off trading at the company’s Silicon Valley headquarters at 6:30 a.m. Pacific time.

The 28-year-old billionaire founder hugged and high-fived Sandberg and other employees in celebration after he pressed the remote button.

The area outside Facebook’s offices at 1 Hacker Way was packed with throngs of photographers, more than 12 television trucks, and a TV news helicopter hovering overhead as the excitement reached fever pitch.

With a value of $104 billion, Facebook became the first American company to debut at over a $100 billion. It is larger than Starbucks Corp and Hewlett-Packard combined.

“A 15 to 20 percent pop is in the realm of possibility,” said Tim Loughran, a finance professor at the University of Notre Dame, before the start of trade.

“Given they already moved their IPO range up and increased the size, that’s bullish to begin with.”

Facebook priced its offering at $38 a share on Thursday, but the price could be higher when shares begin trading under the FB symbol on the Nasdaq at 11 a.m. Eastern time (1500 GMT).

Cameramen gathered around the Nasdaq building in New York’s Time Square early on Friday as press throngs joined tourists and workers in the area. One of the billboards in the area prominently displayed the Facebook logo.

On Twitter and in office elevators the morning talk was betting how much Facebook’s initial price would rise by the end of trading.

Some expect shares could rise 30 percent or more on Friday, despite ongoing concerns about Facebook’s long-term money-making potential. An average of Morningstar analyst estimates put the closing price for Facebook shares on Friday at $50.

The IPO, expected to mint more than a thousand paper millionaires at the company, has received wall-to-wall media coverage and sparked hopes of a boom in sales of everything from San Francisco Bay area real estate to automobiles.

Facebook employees marked the event with an all-night “hackathon” at the company’s Menlo Park, California, headquarters starting on Thursday evening, a tradition in which programmers work on side projects that sometimes turn into mainstream offerings.

The website, founded in a Harvard dorm room in 2004, has grown into the world’s dominant social network with 900 million users.

At $38 a share, Facebook would trade at more than 100 times historical earnings versus Apple Inc’s 14 times and Google Inc’s 19 times.

For all the high expectations surrounding Facebook, the company faces challenges maintaining its momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

General Motors said on Tuesday it would stop placing ads on Facebook, raising questions about whether display ads on the site are as effective as they are in traditional media.

(This story has been corrected to amend opening price to $42.05, not $43)

(Additional reporting By Edwin Chan in San Francisco and Yinka Adegoke in New York; Editing by Steve Orlofsky)

NEW YORK (Reuters) – U.S. stocks were little changed on Friday, with equities unchanged by the delayed market debut of Facebook .

Facebook rose 11 percent to $42 in early trading.

The Dow Jones industrial average <.dji> was down 7.34 points, or 0.06 percent, at 12,435.15. The Standard & Poor’s 500 Index <.spx> was up 0.64 points, or 0.05 percent, at 1,305.50. The Nasdaq Composite Index <.ixic> was down 5.14 points, or 0.18 percent, at 2,808.55.

(Reporting by Ryan Vlastelica; Editing by Dave Zimmerman)

NEW YORK (Reuters) – Stock index futures edged up on Friday but major indexes were setting up to close their worst week of the year, while Facebook‘s debut could help lift battered investor sentiment.

The S&P has fallen 6.7 percent so far in May, and while volatility is expected to continue, some analysts were forecasting a near-term rebound.

Investors are bracing for Facebook’s Wall Street debut after the world’s No. 1 online social network raised about $16 billion in one of the biggest initial public offerings in U.S. history. Facebook priced its offering at $38 a share on Thursday, and shares are expected to begin trading under the FB symbol on Nasdaq at around 11 a.m. EDT.

The large weekly decline in equities came amid uncertainty over a political crisis in Greece and whether that could trigger a default and possible exit from the euro zone.

Market participants were skittish even as a poll showed Greek voters are returning to the establishment parties that negotiated its bailout, offering some respite to European leaders who say a snap Greek election next month will decide whether it must quit the euro.

“Even good news is not enough to overcome the fear that there is going to be a dramatic slowdown in the world economy because of the European crisis,” said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

“Today, Facebook trading up would be a good start,” he said, adding that a decline below the IPO price “could be a big negative for the market.”

S&P 500 futures rose 7.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 59 points, and Nasdaq 100 futures added 12 points.

The cost to insure Spanish government debt against default hit record highs Friday, a day after Moody’s cut its rating on Spanish banks en masse, heightening fears of contagion from the Greek political crisis.

Spanish government-run Bankia shares, up more than 20 percent on the day but still down 33 percent this month, led a rebound in Spanish banking stocks as traders closed short positions. U.S.-traded shares of Banco Santander and BBVA rose near 5 percent in light premarket trading.

U.S. stocks hit a four-month low on Thursday as another round of weak data undermined hopes for a U.S. economic recovery, and as rising Spanish bond yields increased investor anxiety over the European nation’s banks.

(Reporting by Rodrigo Campos. Editing by Bernadette Baum, Dave Zimmerman)

MADRID (Reuters) – Spanish bank bad loans rose in March to their highest in 18 years, figures from the Bank of Spain showed on Friday, underscoring the problems facing the government as it attempts to clean up the sector and get its economy back on track.

The Bank of Spain said bad loans rose to 8.37 percent of the banks’ outstanding loans, the highest since August 1994 and up from 8.3 percent in February, which was also revised higher.

The data came as Spain was set to name independent auditors to assess how much cash its banks are likely to need to rebuild their balance sheets.

Financial sources have said fund manager BlackRock and management consultancy Oliver Wyman would likely be named to conduct a deep audit of the sector, but a government source told Reuters a final decision had not been reached and BlackRock may have a conflict of interest.

An announcement on the auditors would come on Friday or Monday, several government sources said.

The Bank of Spain figures, released hours after a mass bank downgrade by credit ratings agency Moody’s, showed losses from loans made in Spain’s housing bubble are still rising.

Troubled banks, along with overspending in indebted regions, are the two biggest risks for Spain’s public finances. Investors believe Spain needs to aggressively address these two issues to avoid an Irish-style bailout.

Banks expect bad loans to continue to rise this year as the economy contracts and the jobless rate remains painfully high at almost one in four of the workforce, the highest in the EU.

Against that backdrop, analysts estimate bad loans could rise to well over 10 percent of loans.

“The challenge is the non-performing loans portfolio that sits on their books and the direction of that (level),” Johannes Wassenberg, managing director of banking at Moody’s, told Reuters on Friday. “The key is getting to the bottom of that, whether in a single entity or a consolidated basis.”

A more immediate worry is if savers start to withdraw deposits. A report that partly nationalized lender Bankia had lost more than 1 billion euros ($1.3 billion) in deposits sparked a 30 percent crash in its shares on Thursday, before denials of an exodus.

BORROWING COSTS

On the streets of Madrid, there are no signs of panic about savings, but some are wary and are checking with branch managers and friends and relatives to discuss their concerns.

“The banks in Spain aren’t in a good position to secure deposits and the accounts of Spaniards, and our government should have known that and taken the necessary measures so that this (the uncertainty over the banks) wouldn´t happen,” said Manuel, a Madrid resident who didn’t give his last name.

Spain’s borrowing costs hit euro-era highs this week, prompting the government to ask Europe for more backing.

Prime Minister Mariano Rajoy will press for the European Central Bank to step up its defence of the euro zone in a meeting on Sunday with German Chancellor Angela Merkel, on the sidelines of a NATO summit in Chicago, and at a lunch with French President Francois Hollande on Wednesday in Paris.

Spanish officials say Spain has done its job with reforms to make its economy more competitive, such as making it cheaper for companies to hire and fire, with measures to shore up the banking system, and with harsh spending cuts.

They say ECB bond buying is necessary to back up Spain’s efforts. Rajoy has pledged to continue with austerity measures even though they have aggravated the economic contraction.

There is skepticism the government’s estimates of losses are high enough, so the auditors will first stress-test the sector and then look at each bank individually.

The government has also hired Goldman Sachs to carry out an independent valuation of Bankia, the ailing bank taken over by the state last week, two sources said, one from the government, one from the financial sector.

REAL ESTATE LOSSES

Bankia’s financial hole may reach 8 billion euros ($10.2 billion), on top of the 10 billion it needs to set aside to cover potential losses on real estate assets, newspaper Expansion said.

Moody’s on Thursday downgraded 16 Spanish banks, citing the recession, real estate crisis and unemployment, and the government’s reduced ability to support troubled lenders. But the move had been expected and Spanish bank shares rose on Friday to trim losses at the end of a grim week.

By 0940 GMT shares in Santander were up 2 percent and BBVA added 3 percent, outperforming a 0.4 percent fall in the European bank sector.

Bankia shares jumped 18 percent, but have still tumbled 31 percent in the last two weeks. Santander and BBVA have both dropped 7 percent this week as the crisis has rattled investors in the bigger, stronger lenders too.

The cost of insuring the banks against default has also risen. By 1000 GMT Santander’s five-year credit default swaps (CDS) were up 9 basis points at 452.25 bp and BBVA rose 12.5 bp to 499 bp. This means it costs just under $500,000 annually to buy $10 million of protection against a BBVA default using a five-year CDS contract.

Insurance costs have risen across the sector this week, with the iTraxx Senior Financial index breaching 300 bp on Thursday for the first time since December.

Bankia – due to present a restructuring plan next week – has said it would need 4.7 billion euros in capital to comply with the last banking reform.

The government last week forecast banks would need to find about 35 billion euros more to cover potential losses, marking its fourth attempt to deal with a 2008 property market crash.

($1 = 0.7869 euros)

(Additional reporting by Paul Day and Catherine Macdonald in Madrid and Steve Slater and Jean-Marc Poilpre in London; Editing by Fiona Ortiz and David Holmes)

U.S. stock index futures pointed to a slightly higher open on Wall Street on Friday, with futures for the S&P 500 and the Dow Jones up 0.2 percent and Nasdaq futures up 0.3 percent at 4:41 a.m. EDT.

Japan’s Nikkei average dived 3 percent on Friday to log a seventh straight week of losses, its longest such run since the third quarter of 2001, as investors sold stocks and other risky assets on concerns over slowing global growth and a deepening euro zone crisis.

Incoming French President Francois Hollande meets with U.S. President Barack Obama ahead of a meeting of G8 leaders this weekend and a NATO summit that immediately follows. Analysts and officials say there is little doubt the U.S. president will use the opportunity to try to build rapport and stress the importance of European cohesion.

Facebook Inc is set to raise up to $18.4 billion in its IPO and become the first U.S. company to be worth more than $100 billion at its debut, as investors bet on a big pop in the stock when it begins trading on the Nasdaq on Friday.

Strong athletic footwear sales are expected to boost earnings for Foot Locker , whose results outpaced Wall Street estimates throughout 2011. Financial performance in Europe will be a point of focus, considering the macro-headwinds in the continent, although its performance in the U.S. is expected to be solid. Clothier AnnTaylor also reports quarterly results.

GE General Electric aims to double the number of joint ventures it has in China from the current 28 in roughly five years, its vice-chairman said on Friday.

The company is also working with the government of Myanmar on possible infrastructure projects, its vice-chairman said on Friday, a day after the United States said it had suspended sanctions barring U.S. investment in the poor Southeast Asian country.

U.S. stocks hit a four-month low on Thursday as rising Spanish bond yields increased investor anxiety over that country’s banks and another round of weak data undermined hopes for U.S. economic recovery.

The Dow Jones industrial average dropped 156.06 points, or 1.24 percent, to 12,442.49. The Standard & Poor’s 500 Index fell 19.94 points, or 1.51 percent, to 1,304.86. The Nasdaq Composite Index lost 60.35 points, or 2.10 percent, to 2,813.69.

(Reporting By Francesco Canepa)

LONDON (Reuters) – The U.S. dollar climbed, world shares fell and German borrowing costs hit record lows on Friday as a deepening Spanish banking crisis, uncertainty about Greece’s future in the euro zone and lackluster U.S. data provoked a rush for safe-haven assets.

World stocks, as measured by the MSCI index, dropped 0.85 percent and are now below where they began the year, having relinquished all their first quarter gains which were fuelled by the European Central Bank‘s creation of more than a trillion euros of three-year money.

That rally is now a distant memory as an ugly week for stock markets looked likely to end even uglier.

Across the board, riskier assets from commodities such as gold and oil and currencies like the euro and the Australian dollar were all heading for big weekly losses.

The FTSEurofirst 300 of leading European shares slid 0.9 percent to 972.69 by 4 a.m. EDT, falling for a fifth day running and taking its weekly loss so far to five percent.

Benchmark 10-year German bond yields hit a record low of 1.396 percent and two-year yields also fell to their lowest-ever level at just 0.028 percent.

Investors were spooked by a ratings downgrade of 16 Spanish banks by Moody’s Investors Service, although the move had been expected, and an unexpected contraction in U.S. regional factory activity reported on Thursday.

Sentiment has soured to the extent that an opinion poll showing Greeks are returning to the establishment parties which support the country’s bailout, had little impact.

If they vote that way in the June 17 elections, Greece’s place in the euro zone would look more secure and the threat of contagion engulfing countries such as Spain would diminish.

“European markets are still in a very fatalistic mood because of Greece and possible contagion,” said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets. “My view is that it is very likely that the ECB will step in before the situation spirals out of control, which will support the markets.”

The safe-haven dollar rose against a basket of major currencies to hit a four-month high of 81.758 , while the euro marked a four-month low around $1.2649.

Greece has captured the headlines in recent days but the much larger Spanish economy poses an equal threat.

Spain’s banks, saddled with bad loans after a property boom collapsed, may need a bailout that would strain Madrid’s already stretched finances and possibly require an international bailout regardless of any contagion threat from Greece.

Spanish and Italian 10-year borrowing costs rose and are both now above the six percent level which investors view as a pivot point that could accelerate a climb to 7 percent, a cost of borrowing widely seen as unaffordable.

CATALOGUE OF YEAR LOWS

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 3 percent to its lowest this year and was on track for its worst weekly performance in nearly eight months with a loss exceeding 6 percent this week.

The index has shed more than 11 percent in May, wiping out all its gains for the year.

As risk aversion intensified, the CBOE VIX Volatility index – a gauge of investors’ anxiety that measures expected volatility in the Standard & Poor’s 500 index over the next 30 days – rose nearly 1 percent to close at a five-month high on Thursday.

Brent crude slipped below $107 per barrel on Friday to its lowest in 2012 as the euro zone crisis and weak U.S. data raised fears of a global slowdown that could dent oil demand.

Gold, the traditional safe haven, reversed course and edged down after posting its biggest daily rise in more than three months the previous session.

“We’ve got a bit of a perfect storm at the moment,” Michael McCarthy, a markets strategist at CMC Global Markets in Sydney said.

(Additional reporting by Tricia Wright, Florence Tan,; Editing by David Stamp)

MADRID (Reuters) – The Spanish government has hired Goldman Sachs to carry out an independent valuation of Bankia , the ailing bank taken over by the state last week, Spanish newspaper Expansion said on Friday.

The U.S. bank will review Bankia’s and its parent company BFA’s books and determine within a month how much the state should inject to refloat the lender, which had to be rescued after its auditor, Deloitte, identified several gaps in last year’s accounts.

Expansion said without citing sources that Bankia’s financial hole may reach 8 billion euros on top of the 10 billion euros it needs to set aside to cover potential losses on real estate assets, as required by two financial reforms passed by the government in February and last week.

Bankia’s share price slumped as much as 30 percent on Thursday, when Madrid denied a report that customers had withdrawn more than 1 billion euros ($1.3 billion) from the partly nationalized lender.

A senior government source said on Thursday that the Economy Ministry would name two independent auditors to review Spain’s entire banking sector at noon on Friday.

According to banking sources, BlackRock and Oliver Wyman are likely to be chosen. They will first value the sector as a whole and then look at each bank individually, the government source said.

Moody’s Investor Service carried out a sweeping downgrade of 16 Spanish banks on Thursday, including Banco Santander , the euro zone’s largest, citing a weak economy and the government’s reduced ability to support troubled lenders.

All the banks’ long-term debt ratings were downgraded by at least one notch, and some suffered three-notch cuts.

(Reporting by Julien Toyer; Editing by John Stonestreet)

TOKYO (Reuters) – Asian shares tumbled on Friday and were set for their worst weekly showing since September, amid political turmoil in Greece and signs of growing instability in Spanish banks, with investors adding the latest weak U.S. data to the list of risk factors.

Assets across the board, from commodities such as oil and gold to riskier currencies such as the euro and the Australian dollar were all heading for their weekly losses.

Financial stocks were hammered after the head of Australia and New Zealand Banking Group said volatile conditions in global markets have caused the wholesale funding market for Australian banks to freeze again, a worrying echo of the global financial crisis.

European shares were also set to fall, with financial spreadbetters predicting that major European markets would open down as much as 1.3 percent. U.S. stock futures were down 0.3 percent.

“It is too difficult to accurately quantify the risks in Europe over which concerns will become reality and how much damage it will translate into,” said Cho Byung-hyun, an analyst at Tong Yang Securities.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 3 percent to its lowest this year, after snapping a four-day losing streak on Thursday, and was on track for its worst weekly performance in nearly eight months with a weekly loss exceeding 6 percent.

The index has shed more than 11 percent in May, wiping out all its gains for the year.

Concerns over weak demand dragged the materials sector down 3.6 percent, while fears of slowing global economies sent growth-sensitive technology and industrials sectors down 3.6 percent and 3.1 percent respectively.

Korean shares plunged the most in the Asian index with a 3.3 percent drop to their lowest this year, dragged down by blue-chip heavyweights such as Samsung Electronics , which lost more than 4 percent.

Australian stocks also remained strongly pressured by a sluggish outlook for both the commodities markets and the Chinese economy – two key factors affecting investor sentiment.

Japan’s Nikkei stock average slumped 3 percent to a four-month low and was on track for its seventh straight weekly loss, its longest such losing run since 2001.

“There is no resolution to the (European) problem yet, and we also we had very disappointing U.S. data, so overall, it’s negative and further denting market sentiment,” said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong, referring to an unexpected contraction in U.S. regional manufacturing and a lackluster jobs market data.

STRESSFUL TIMES

As risk aversion intensified, the CBOE VIX Volatility index , a gauge of investor anxiety that measures expected volatility in the Standard & Poor’s 500 index over the next 30 days, rose nearly 1 percent to close at a five-month high of 24.49 on Thursday.

High stress levels spilled over to Asian credit markets on Friday, sharply widening the spread on the iTraxx Asia ex-Japan investment-grade index by 11 basis points to its widest level since mid-January.

“It’s usually a liquidity crisis that causes an explosion in volatility, which in turn drives a second round impact through economic losses. That has not happened yet. That’s good. But that’s where the list of positives ends,” Bhanu Baweja, strategist at UBS, said in a note to clients.

Concerns about growth plus Europe’s worsening financial woes have given momentum to the flight to safety, pushing the 10-year Japanese government bond yield to its lowest since July 2003 at 0.815 percent on Friday.

Investor appetite for the dollar and the yen, perceived as safer assets, was also strong.

The euro fell to a three-month low below 100.40 yen while the dollar index measured against key currencies climbed to a fresh four-month high, leaving the dollar/yen just above a three-month low of 79.13 yen hit on Thursday.

But the euro marked a fresh four-month low around $1.2655 on Friday and was expected to stay under strong selling pressure. The Australian dollar fell to its lowest since late November near $0.9800.

“Financial and asset market divergence in the Eurozone is likely to make the EUR (euro) less attractive to reserve managers, in our view,” leaving the single currency increasingly vulnerable, Morgan Stanley said in a research note.

EUROPEAN WOES HURT OIL

U.S. June crude oil fell 0.5 percent to $92.12 a barrel and Brent eased 0.3 percent to $107.20.

Spot gold steadied at $1,573 an ounce, but was set to drop for a third straight week on mounting concerns over the euro zone debt crisis.

Financial instability in Spain deepened, with Moody’s Investors Service cutting the long-term and deposit ratings of 16 Spanish banks, just as the prospect of more state bailouts for banks have pushed the country’s borrowing costs higher.

Also on Thursday, Fitch downgraded Greece deeper into junk territory, citing the risk that the heavily indebted country might leave the euro zone.

A poll on Thursday, the first conducted since talks to form a government collapsed and a new election was called for June 17, showed Greek voters were selecting pro-bailout parties, which would soothe European leaders who say that without the bailout Greece would be headed for bankruptcy and falling out of the common currency.

(Additional reporting by Joonhee Yu in Seoul and Vidya Ranganathan in Singapore; Editing by Alex Richardson)