Reuters: US Dollar Report: GLOBAL MARKETS-Stocks and euro pare gains on Boehner comments

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GLOBAL MARKETS-Stocks and euro pare gains on Boehner comments Nov 29th 2012, 18:24 Thu Nov 29, 2012 1:52pm EST (Removes superfluous words in 1st paragraph.) * U.S. fiscal talks the big driver of global markets * U.S. Treasuries prices rise as debt talks drive safety bid NEW YORK, Nov 29 (Reuters) - U.S. stocks and the euro pared gains on Thursday as risk aversion rose after top Republican lawmaker John Boehner said there had been no substantive progress in the last two weeks in talks to reach a budget deal that would avoid the "fiscal cliff." Boehner, the speaker of the U.S. House of Representatives, said he had no idea what compromises the White House is willing to make on spending cuts, following a meeting with U.S. Treasury Secretary Timothy Geithner. He said Geithner, the White House's top liaison to Congress, gave no new substantive plan for finding a deal on the budget. Boehner's comments rattled investors who had earlier driven a benchmark world stock index to a three-week high alongside a rally in the euro and commodities on hopes that U.S. political leaders would reach a deal to avert $600 billion in spending cuts and tax hikes that are seen as a threat to the U.S. economy. "When the sentiment is that nothing is going to get done, it does create a lot of anxiety and selling pressure. If there's any sense of progress, then the market seems to rally," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago. "I think we're hostage to this for the rest of the year." The fiscal cliff is the biggest risk facing global markets in the final weeks of the year, following an agreement earlier this week on fresh aid for Greece. The Dow Jones industrial average was up 33.11 points, or 0.25 percent, at 13,018.22. The Standard & Poor's 500 Index was up 5.43 points, or 0.39 percent, at 1,415.36. The Nasdaq Composite Index was up 17.06 points, or 0.57 percent, at 3,008.84. The MSCI global equities index was up 0.9 percent at 332.25 points, after earlier touching its highest level since Nov. 7. The FTSE Eurofirst 300 index closed up 1.1 percent, with the close of stock markets there almost coinciding with Boehner's comments. It was the highest close for the benchmark European index since July 2011. Mining stocks, which are seen as among the riskiest equity sectors because they are more sensitive to changes in economic sentiment, were the best performers. Good demand at a bond sale by Italy, where yields fell to their lowest level in two years, added to signs the crisis in the euro area has begun to ease and helped bolster optimism earlier in the global day. Traders said until a deal was done in Washington, share markets were likely to remain skittish. U.S. government debt prices rose on Thursday on safe-haven demand from investors who were rattled about the progress of budget talks in Washington. The benchmark 10-year U.S. Treasury note was up 4/32, with the yield at 1.6182 percent. RISK FLOWS CHANGE Safe-haven German government bonds fell as investors returned to riskier assets before Boehner's comments, pushing the benchmark 10-year debt yields up slightly to 1.37 percent . The better tone allowed Italy to auction successfully six billion euros ($7.75 billion) of new five- and 10-year debt, which was expected to complete Italy's funding needs for the year. The yield on the 10-year bond was around the lowest since November 2010. Spain announced it would sell some more bonds at an auction on Dec. 5, although it has completed raising all the money it needs for this year. Italian and Spanish debt have benefited in recent months from the European Central Bank's pledge to buy sovereign debt if countries ask for aid first. Though that has not happened yet, the prospect of a central bank backstop has made investors reluctant to sell and has pushed them back into those markets. A fall in Italian and Spanish yields helped lift the euro against the dollar by 0.2 percent to $1.2971, with the hopes for a U.S. fiscal deal adding to support for the common currency. Commodity markets also got some support from the U.S. fiscal deal hopes, while mounting tension in the Middle East bolstered oil prices on supply concerns. U.S. crude oil futures rose $1.58 to $88.06 a barrel, and Brent climbed $1.23 to $110.72 a barrel. Spot gold was up 0.4 percent at $1,726.71 an ounce, after a 1.3 percent tumble on Wednesday, the biggest daily decline in nearly four weeks. "Gold is being pulled higher on this prevailing optimism over the fiscal cliff," said Ross Norman, chief executive of bullion dealer Sharps Pixley in London. (Reporting by Nick Olivari; Additional reporting by Rodrigo Campos and Ed Krudy in New York and Richard Hubbard, Marc Jones, Jon Hopklins and William James in London; Editing by Leslie Adler) Link this Share this Digg this Email Reprints

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