GLOBAL MARKETS-Shares rise but euro slips ahead of Spain budget

by on September 27, 2012 3:05 pm GMT

Thu Sep 27, 2012 11:05am EDT

* Stocks up around the world as Spain budget looms

* Euro off 1.6 percent vs dollar over past two weeks

* Brent futures remain above $110

NEW YORK, Sept 27 (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 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 was up 26.04 points,
or 0.19 percent, at 13,439.55. The Standard & Poor’s 500 Index
was up 5.81 points, or 0.41 percent, at 1,439.13. The
Nasdaq Composite Index 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 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 1

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.


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 Sept. 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