A modest rebound on Wall Street helped pushed the euro to a session high above $1.37, although sentiment toward the single currency remained broadly negative, analysts said. US stocks edged higher after results at drugstore operator CVS Caremark Corp. and toy maker Hasbro Inc. topped expectations and both companies raised their outlooks. Rising defensive stocks such as drug makers helped European shares snap three days of losses, but worries about Greece and other debt-laden European countries kept gains in check.
US Treasury debt prices fell slightly ahead of new supply. But the spread of peripheral euro zone government bond yields over German benchmarks widened and the cost of insuring against a default rose as investors doubted the effectiveness of deficit-reduction plans by certain European governments.
Greek civil servants threatened to stage more strikes to protest austerity measures, heightening fears that governments cannot deliver on promises to tackle stretched budgets. “There’s still a credibility gap, particularly on Greece, but growing on Spain and Portugal. Investors are still not convinced these measures in Greece will be implemented and remain skeptical about governments’ ability to hit deficit reduction targets,” said Nick Stamenkovic, a rate strategist at RIA Capital Markets.
Shortly after midday, the Dow Jones Industrial Average was up 3.10 points, or 0.02 percent, at 10,015.33. The Standard & Poor’s 500 Index was up 3.05 points, or 0.29 percent, at 1,069.24. The Nasdaq Composite Index was up 9.01 points, or 0.42 percent, at 2,150.13.
Financial shares on both sides of the Atlantic were pressured by fears the fiscal problems in Europe could spread. J.P. Morgan Chase & Co. fell 1.3 percent to $37.81 and was one of the Dow’s top drags.
In Europe, Greek banks National Bank of Greece SA, Alpha Bank and Bank of Piraeus lost 5.4 percent to 8.5 percent. Banks elsewhere in Europe rebounded from earlier falls. Dexia rose 4.7 percent, while Credit Agricole and UBS rose about 2 percent.
The FTSEurofirst 300 index of top European shares closed up 0.8 percent at 979.72 points in choppy trade. Spot gold prices rose $3.80 to $1,068.70 an ounce.
US Treasury prices slipped as investors prepared for a series of auctions of three-year, 10-year and 30-year US government securities worth a total of $81 billion.
The Treasury Department will sell $40 billion in three-year notes on Tuesday. Three-year notes traded slightly lower ahead of the auction. The benchmark 10-year US Treasury note was down 6/32 in price to yield 3.59 percent.
Earlier in Asia, Japan’s Nikkei average fell 1.1 percent to a two-month closing low as exporters like Sony Corp. were clobbered by a strong yen. Asia Pacific shares outside Japan as measured by MSCI fell 0.6 percent after earlier falling to its lowest levels since early September.
Meanwhile, oil inched up on Monday, as a weaker US dollar, cold weather and geopolitical disputes provided support after three straight losing sessions.
US crude for March rose 22 cents to $71.41 a barrel by 1:48 a.m. (1848 GMT) The contract fell as low as $69.50 on Friday, the lowest since Dec. 15. In London, Brent crude rose 6 cents to $69.65.
