Reuters: US Dollar Report: GLOBAL MARKETS-Stocks get end-quarter bounce, eyes on EU meeting

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GLOBAL MARKETS-Stocks get end-quarter bounce, eyes on EU meeting Mar 30th 2012, 09:46 Fri Mar 30, 2012 5:46am EDT * Europe shares up 0.5 pct as finmins gather * Dollar hits one-month low; bounce back seen * Flat bond market braces for Spanish budget * Growth concerns, euro zone woes cloud backdrop By John Stonestreet LONDON, March 30 (Reuters) - World stocks rose on Friday, with Europe gaining half a percent on the last trading day of a strong quarter as investors bet ministers will agree later in the day to almost double the euro zone's crisis-fighting funds. But the backdrop was clouded across all asset classes, having soured since mid-March due to growth concerns centred on China, uncertainty about the strength of the U.S. recovery and the conviction that huge injections of central bank money may be no more than a panacea for Europe's debt troubles. "All the European (share) markets have broken below their 2012 trend channels ... Now, indices are getting close to March lows," Aurel BGC chart analyst Gerard Sagnier said. "We'll have to wait for the consolidation phase, which has just started, to stabilise before going 'long' again." The FTSEurofirst 300 gained 0.5 percent, ending a three-session slump and helping lift MSCI's all-country world index 0.3 percent for an 11 percent first-quarter gain. Wall St was also seen opening higher . The dollar fell to a one-month low against major currencies, pressured by quarter-end flows, a flurry of softer U.S. economic data and expectations of further monetary stimulus from the Federal Reserve. European policymakers were poised for action in Copenhagen, where finance ministers are likely to agree to almost double the euro zone's financial safety net to insulate its most vulnerable states against debt contagion. PAIN IN SPAIN The move, which supported the euro, will be welcomed in Spain. The country is firmly back at the sharp end of the euro zone debt crisis and kept bond markets braced on Friday in anticipation of a budget encapsulating the problems the euro zone faces in slashing public deficits during an economic slump. Feeling mounting pressure from markets amid popular resistance to more austerity, the government in Madrid has flagged deep spending cuts, increasing concerns that the belt-tightening demanded by the EU will only push the economy deeper into recession. "We think that making (fiscal) ends meet will be challenging, though not impossible," Morgan Stanley said in a research note. "We expect the Spanish economy to shrink by 2 percent this year." The yield on the country's 10-year benchmark bond was little changed at 5.43 percent, staying well above the equivalent yield for fellow euro zone struggler Italy , which traded at 5.15 percent. The German Bund future was flat at 138.30 and U.S. Treasury futures were also steady. DOLLAR TAKES A BREATHER The dollar index fell to a one-month low of 78.727, also weighed by steep losses against sterling, which hit a 4-1/2 month high amid quarter-end flows expected to be broadly negative for the greenback. The euro was up 0.3 percent at $1.3337, near a one-month peak of $1.3385 hit earlier this week. Further clues to the economic mood across the Atlantic were expected later in the day from the Chicago PMI index ahead of next week's nationwide sentiment data. "(The) Chicago PMI may set the tone for the national ISM next week," said Chris Turner, chief currency strategist at ING. "Overall, we expect quiet range trading into quarter-end, but continue to favour a 'buy the U.S. dollar on dips' strategy - as U.S. growth stabilises and major trading partners try to engineer weaker currencies." Brent crude rose back above $123 as investors bet on a tighter U.S. gasoline market during the peak summer driving season and on persistent worries of supply disruptions in the Middle East. Front-month Brent crude rose 0.65 percent to $122.78 $123.19 a barrel, recovering from its sharpest daily fall in more than three weeks. Oil had tumbled in the past two sessions on growing talk of a release of strategic petroleum reserves by some consumer nations, and a surge in U.S. crude inventories. Link this Share this Digg this Email Reprints

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