Shares rise but euro slips ahead of Spain budget
NEW YORK |
(Reuters) - Stock markets reclaimed some ground though the euro fell on Thursday on speculation Spain could move toward a debt rescue and the European Central Bank would launch a new bond-buying plan.Talk that the China Securities Regulatory Commission would announce steps to support beleaguered domestic markets was also positive for relatively risky investments.
A report showing U.S. durable goods orders falling by a larger than expected amount in August and another estimating second-quarter gross domestic product below expectations curtailed gains, though a fall in initial jobless claims in the latest week was taken as encouraging.
But euro zone worries have roared back into focus over the last week as the feel-good factor of recent central bank stimulus has given way to renewed uncertainty over Spain's willingness to submit to a politically painful rescue program.
The Spanish government will hold a news conference on the 2013 budget and on economic reforms at 1500 GMT on Thursday, the prime minister's office said.
The MSCI world equity index .MIWD00000PUS was up 0.5 percent to 332.28.
"I think ... a few opportunistic buyers have been creeping in, on the hope that Spain might just push the bailout button," said Angus Campbell, head of market analysis at Capital Spreads in London. "If that happens, I can only imagine you'll see risk assets rise."
The Dow Jones industrial average .DJI was up 26.04 points, or 0.19 percent, at 13,439.55. The Standard & Poor's 500 Index .SPX was up 5.81 points, or 0.41 percent, at 1,439.13. The Nasdaq Composite Index .IXIC was up 17.99 points, or 0.58 percent, at 3,111.69.
Separately, the Labor Department said the U.S. economy likely created 386,000 more jobs in the 12 months through March than previously estimated, in a preliminary estimate of its annual "benchmark" revision to closely watched payrolls data.
Contracts to buy previously owned U.S. homes slipped in August due to a shortage of lower priced inventory in most of the country, an industry report revealed on Thursday. European shares trimmed gains after the U.S. home sales figures though the pan-European FTSEurofirst 300 index .FTEU3 was up 0.3 percent at 1,102.54 points.
In China, stocks rebounded from multiyear lows on speculation a China Securities Regulatory Commission announcement could include changes to the initial public offering market. Traders said China's central bank fed $57.9 billion into money markets this week, the largest weekly injection in history.
Chinese equities helped push Asian stocks .MIAPJ0000PUS 1 percent.
But all eyes remained on Spain.
"The Spanish budget and whether that is linked to a request for aid is what everybody will be looking at today," said Aline Schuiling at ABN Amro.
Prime Minister Mariano Rajoy "appears to be trying to resist making the request but, as we have seen, the yields are back above 6 percent and I think the markets certainly have the power to force his hand."
The budget figures and new spending cuts will begin a busy two days in Madrid.
New stress tests on Friday will also spell out how much more money will be needed to strengthen its shaky banking sector. Spain also faces the prospect of possible sovereign downgrade by ratings firm Moody's.
BOND LULL
Protests in Spain and Greece against austerity measures had roiled markets on Wednesday, sending 10-year Spanish bond yields back above the 6 percent threshold.
Spanish yields were slightly lower at 5.994 percent while the German 10-year Bund was flat at 1.455 percent.
The benchmark 10-year U.S. Treasury note was down 8/32, with the yield at 1.637 percent.
Conscious that seeking help from EU partners would carry conditions for budget savings that would be unpopular at home, Rajoy has said he is not sure if a bailout is needed and has made clear he is in no hurry to ask for one.
The euro, which has lost more than 1.6 percent over the last two weeks, was last down 0.2 percent at $1.2848.
The dollar was a touch lower at 77.68 yen, inching back towards a seven-month low hit on September 13, the day the Federal Reserve announced a new round of monetary stimulus.
Oil prices were little changed as renewed worries over supply disruptions from the Middle East due to anti-Israeli and anti-Western comments from Iran, helped keep Brent futures above $110.
(Reporting By Nick Olivari; Additional reporting by Julie Haviv, Ellen Freilich, Ryan Vlastelica and Chuck Mikolajczak in New York, and Marc Jones in London; Editing by Kenneth Barry)
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