Reuters: US Dollar Report: GLOBAL MARKETS-Stocks and euro up on Spain's budget

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GLOBAL MARKETS-Stocks and euro up on Spain's budget Sep 27th 2012, 16:53 Thu Sep 27, 2012 12:53pm EDT * Spain 2013 focuses on cuts to spending vs tax hikes * U.S. economic data mixed * Crude oil above $110 on Iran tensions NEW YORK, Sept 27 (Reuters) - Stocks rallied and the euro rebounded from two-week lows on Thursday after the Spanish government said it would cut spending sharply and opened the door for a potential European bailout. Spain's Deputy Prime Minister Soraya Saenz de Santamaria announced a timetable for economic reforms and a tough 2013 budget focused on spending cuts rather than tax rises as the country continues to negotiate a possible European aid package to ease the country's high borrowing costs.. Officials said Spain was still analysing the terms of the potential European Central Bank bond buying program announced earlier this month and added a decision on an aid request will be taken when the effect of the spending cuts is fully known. "If there's a solution where (Spain) can lower their yields, then there's a possibility Spain will find a way to pull themselves out of this mess. Stocks are popping on this, and so is gold," said Mike Matousek, senior trader at U.S. Global Investors in San Antonio. The euro, which has lost more than 1.6 percent over the last two weeks, rose to $1.2891 after hitting a low of $1.283 earlier in the day. Talk on Thursday that the China Securities Regulatory Commission would announce steps to support beleaguered domestic markets was also positive for relatively risky investments. . The MSCI world equity index was up 0.6 percent to 332.53. The Dow Jones industrial average was up 15.44 points, or 0.12 percent, at 13,428.95. The Standard & Poor's 500 Index was up 5.15 points, or 0.36 percent, at 1,438.47. The Nasdaq Composite Index was up 17.66 points, or 0.57 percent, at 3,111.36. Spot gold rose to $1,778.64 and was on track for its biggest one-day gain in two weeks. DOUBTS ABOUT SPAIN Euro zone worries have come back into investor focus over the last week as the rally in stockmarkets resulting from stimulus announced by the Federal Reserve and ECB has given way to doubts about whether Spain would submit to a politically painful rescue program. Conscious that seeking help from EU partners would carry conditions for budget savings that would be unpopular at home, Spanish Prime Minister Mariano Rajoy had said he is not sure if a bailout is needed. Protests in Spain and Greece against austerity measures had roiled markets on Wednesday, sending 10-year Spanish bond yields back above the 6 percent threshold. Spanish yields were slightly lower on Thursday at 5.959 percent while the German 10-year Bund was flat at 1.465 percent. US DATA MIXED A report showing U.S. durable goods orders falling by a larger than expected amount in August, and another estimating second-quarter gross domestic product below expectations curtailed gains in stocks, though a fall in initial jobless claims in the latest week was taken as encouraging. . Separately, the Labor Department said the U.S. economy likely created 386,000 more jobs in the 12 months through March than previously estimated, in a preliminary estimate of its annual "benchmark" revision to closely watched payrolls data. "You put it all together, a lot of this is backward-looking data, some of this is more forward-looking, said Tim Ghriskey, chief investment officer at Solaris Group in Bedford Hills, New York. "It's certainly a negative but not a disaster at all and the stock market is not reacting significantly here to this news." The benchmark 10-year U.S. Treasury note was down 10/32, with the yield at 1.647 percent. Oil prices rose as renewed worries over supply disruptions from the Middle East due to anti-Israeli and anti-Western comments from Iran, helped keep Brent futures above $110. Brent crude was up 1.4 percent at $111.63. U.S. crude rose 1.3 percent to $91.24. Link this Share this Digg this Email Reprints

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