Reuters: US Dollar Report: GLOBAL MARKETS-Shares rises on euro zone hopes though euro retreats

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GLOBAL MARKETS-Shares rises on euro zone hopes though euro retreats Aug 6th 2012, 15:01 Mon Aug 6, 2012 11:01am EDT * Euro flat after reaching one-month highs vs dollar * Wall Street opens higher * Crude oil prices post modest gains in choppy trading By Leah Schnurr NEW YORK, Aug 6 (Reuters) - U.S. and European shares rose on Monday as European and IMF inspectors said Greece made progress on its debt bailout program, helping spur equities to build on gains from the previous session's rally driven by ECB plans to help borrowers under pressure. But currency and bond investors strayed from this optimism, as the euro fell against several major currencies and erased gains against the dollar and crude oil prices posted modest gains in choppy trading. The euro and stock markets had enjoyed a strong finish to last week after robust U.S. jobs data on Friday eased concerns about global growth. Compounding investor optimism were European Central Bank President Mario Draghi's comments late last week on plans for new wave of bond purchases aimed at helping to calm the euro zone's turmoil, lately focused on Spain and Italy's high borrowing costs. "There is a definite dichotomy in investor sentiment at the moment. There has been a good bit of interest from shorter-term traders to fade the recent bout of euro strength given the lack of action and follow-through from Draghi last week," said Andrew Cox, currency strategist at CitiFX in New York. In Athens, inspectors from the International Monetary Fund, the European Commission and the European Central Bank - known as the troika - concluded a visit to Greece, saying they would return in September to give their final verdict. They said Greece has made progress in finding budget cuts needed to continue its bailout program but cautioned not all work is done. "It's follow-through with a little bit of relief that Draghi's remarks point to at least a work-around for Europe," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon. "People are more encouraged the economic slowdown in the U.S. may have reached a plateau," he added, regarding Friday's payrolls report. Wall Street opened higher with the benchmark S&P 500 up 0.5 percent in early morning trade. Still, bond and foreign exchange markets were cautious. Germany has yet to approve Europe's new rescue fund and Spain's 10-year bond yields remain dangerously high. The euro eased against most currencies after earlier hitting a one-month high against the dollar. The MSCI World Index, which captures the world's biggest stock markets, was up 0.7 percent to its highest level since early May. In another sign of the wait-and-see mood, oil prices in New York were up 31 cents to $91.71 a barrel in choppy trade, with buyers caught between euro zone hopes and still struggling growth in many large economies. After the gains of the past week, European equities continued to rise on Monday, touching a new four month high. The pan-European FTSEurofirst 300 was up 0.6 percent. The Dow Jones industrial average was up 67.92 points, or 0.52 percent, at 13,164.09. The Standard & Poor's 500 Index rose 6.72 points, or 0.48 percent, to 1,397.71. The Nasdaq Composite Index gained 16.96 points, or 0.57 percent, to 2,984.86. The euro zone's problems remain the focus for many major investors. The ECB promised last week to stabilize the bloc's bond markets but tensions remain as details of exactly how to achieve this have yet to be settled. The euro was flat against the dollar at $1.2385, below a peak of $1.2443 hit in Asian trade, its strongest since July 5. The ECB continued to keep a lid on its bond purchase program last week. The ECB has barely used the Securities Markets Program (SMP) this year and has not bought any bonds for 21 weeks despite a severe intensification of the euro zone debt crisis. Link this Share this Digg this Email Reprints

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