Search form

Last updated: 10 min 58 sec ago

You are here

Business & Economy

Stocks up; euro off 7-week lows after Italy auction

NEW YORK: Global stock indexes rose yesterday as Federal Reserve Chairman Ben Bernanke's defense a day earlier of the US central bank's asset-buying program helped calm investors, while the euro edged up after solid demand at an auction of Italian government debt.
US stocks opened slightly higher, with investors focusing on Bernanke's second day of testimony in Congress. Bernanke's defense on Tuesday of the Fed's monetary stimulus eased worries over a possible early retreat from its policy of bond purchases.
Some markets also were relieved as Italy sold all 6.5 billion euros of the 5- and 10-year bonds it offered investors where it could have chosen to sell less, though it paid more than half a point more interest than before its election. Two days after the vote offered no party a majority, markets had
been concerned about the country's finances.
Investors fear the strength of the vote for anti-austerity parties in Italy could weaken efforts to reform public finances and labor laws and damage the euro zone's efforts to resolve
its three-year old debt crisis. Italian bonds and those of other euro zone countries
suffering concern over their creditworthiness were helped by the sale, with safe-haven German bonds falling before recouping losses.
The euro recovered from Tuesday's seven-week low and the currency was last up 0.4 percent against the dollar at $ 1.3115.
The MSCI world equity index was up 0.3 percent, and the pan-European FTSEurofirst 300 index
rose 0.4 percent.
Lingering worries about the euro zone kept a lid on gains. "I remain of the opinion that we've seen the highs in the short-term and we're due a bit of a correction," Michael Hewson, analyst at CMC Markets, said.
"Basically, Italy will not have a government of any shape or form for the next two or three months, so really it's just a question of being defensive, taking a little bit of risk off the table."
Italy and Spain's need to change the shape of their economies, get growth going and debt down, have been at the heart of the euro zone's troubles for over a year, but the fears have eased substantially since the ECB said it would do whatever was necessary to prevent a break up of the euro.
On Wall Street, the Dow Jones industrial average was up 56.59 points, or 0.41 percent, at 13,956.72. The Standard & Poor's 500 Index was up 6.48 points, or 0.43 percent, at 1,503.42. The Nasdaq Composite Index was up 10.93 points, or 0.35 percent, at 3,140.58.
Italian 10-year yields fell 7 basis points to 4.83 percent in the secondary market while German Bund futures were 27 basis points up on the day at 145.09 after the sale.
Brent crude gained 33 cents to climb back above $113.04 a barrel, marking a steady recovery from its Tuesday's month low of $ 112.41.

MORE FROM Business & Economy