Reuters: US Dollar Report: GLOBAL MARKETS-Stocks gain on Fed easing expectations

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GLOBAL MARKETS-Stocks gain on Fed easing expectations Sep 11th 2012, 14:30 Tue Sep 11, 2012 10:30am EDT * Stocks up on expectations Fed will ease on Thursday * Euro hits four-month high vs dollar on German court optimism * U.S. Dollar falls after Moody's warns on U.S. rating By Ellen Freilich NEW YORK, Sept 11 (Reuters) - U.S. stocks opened higher on Tuesday on expectations a German constitutional court would not stand in the way of a euro zone rescue plan and that the Federal Reserve would undertake more monetary easing aimed at boosting U.S. employment growth. The prospect of Fed easing weighed on the U.S. dollar though, allowing the euro to reach a four-month high. A statement by Moody's Investors Service that the United States could lose its triple-A debt rating from that credit-rating agency if next year's government budget talks do not result in a lower debt to GDP ratio was also cited as hurting the dollar. Standard & Poor's rating agency cut its triple-A debt rating on U.S. debt on Aug. 5 last year. Investor Warren Buffett reacted at the time, saying U.S. debt merited a "quadruple-A" rating. U.S. stocks rose and Treasury prices slipped. The Dow Jones industrial average was up 69.62 points, or 0.53 percent, at 13,323.91. The Standard & Poor's 500 Index was up 5.46 points, or 0.38 percent, at 1,434.54. The Nasdaq Composite Index was up 9.21 points, or 0.30 percent, at 3,113.23. The MSCI global share index was up 0.28 percent. The benchmark 10-year U.S. Treasury note was down 8/32 in price. Its yield rose to 1.68 percent from 1.66 percent on Monday. The euro hit a four-month high of $1.2836, its highest since May 15, while the dollar index fell below to a four-month low. The euro has been rallying ever since European Central Bank President said in late July that the ECB would do whatever it would take to preserve the European currency union. Last Thursday, Draghi pledged unlimited bond buying to contain the borrowing costs of Spain and Italy. "Draghi's speech in late July kick-started this," said Robert Robis, head of fixed-income macro strategies and senior portfolio manager at ING Investment Management in Atlanta, Georgia. Investors were also waiting for a decision by Germany's Constitutional Court which on Wednesday is expected to approve the European Stability Mechanism -- the euro zone's new bailout fund -- but legal experts believe it will impose tough conditions limiting Berlin's flexibility on future rescues. WAITING FOR THE FED Investors expect the Fed to announce additional stimulus measures when the central bank announces its policy decision after a two-day meeting on Thursday. Another event investors are watching is a Dutch general election on Wednesday, with voters there torn between bailouts for troubled euro zone economies and austerity measures locally. European shares were lower, down 0.24 percent at 5780.15. Bund futures were up 9 basis points at 140.41 as uncertainty remained around the outcome of the ESM ruling and as worries resurfaced on Greece's fiscal repair plans. In contrast, Italian, Spanish and Portuguese borrowing costs were all on the rise. Oil prices remained firm, with Brent crude futures just under $115 a barrel. Safe-haven favourite gold, which has rallied nearly 7 percent over the last month, added 0.4 percent to $1,731 an ounce. Reflecting growing investor jitters, the CBOE Volatility index posted its biggest daily increase in seven weeks on Monday. Link this Share this Digg this Email Reprints

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