While you were sleeping: Spain, Italy boost euro

While you were sleeping: Spain, Italy boost euro

(BusinessDesk) January 14 - Bond sales in Spain and Italy met with strong demand, bolstering the euro, while in the U.S. investors responded with enthusiasm to Marathon Oil Corp’s plans to spin off its refinery and pipeline operations.

In other good news, the U.S. trade deficit unexpectedly narrowed in November as growing global demand and a weaker greenback bolstered overseas sales. The gap declined 0.3% to US$38.3 billion, as exports increased to the highest level in more than two years.

“Exports will be a pretty significant boost” to growth in the fourth quarter, Jay Bryson, a global economist at Wells Fargo Securities LLC, told Bloomberg News. “Exports remain relatively strong because of some bounce-backs in the rest of the world.”

On the flipside, weekly initial claims for U.S. unemployment benefits rose the most in six months, the Labor Department said, underpinning concern that the jobs market wasn’t out of the woods yet.

Investors also didn’t like Merck & Co’s disappointing drug trial news. The drugmaker was the biggest percentage decliner in the S&P 500, plunging 6% after it said it would pull a blood clot drug from one study and not give it to some patients in a late-stage trial.

In early afternoon trading, the Dow Jones Industrial Average slipped 0.13%. The S&P 500 Index edged 0.02% higher and the Nasdaq Composite Index rose 0.12%.

In London, the benchmark Stoxx Europe 600 declined 0.4%.

Spain and Italy followed Portugal with successful debt sales on Thursday, auctioning a total of 9 billion euros in bonds, in another sign that investors have regained a degree of confidence in the European Union’s ability to stem the sovereign debt crisis.

"The figures look really good, it's the perfect sequel to the Portugal auction yesterday," Michael Leister, a strategist at WestLB in Duesseldorf, told Reuters. referring to the Spanish auction.

The euro rose 1.64% to US$1.3351. The U.S. dollar fell 0.22% against the Japanese yen to 82.76. Against a basket of currencies, made up of its major trading partners, the U.S. dollar fell 1.03%.

After the bond sales, European Central Bank President Jean-Claude Trichet renewed a call for euro zone governments to boost the size and scope of their 440 billion euro rescue fund and warned of short-term inflation pressures in the euro area.

In London, ICE Brent crude for February rose 30 cents to US$98.42 at 11.27am EST, while U.S. crude rose 30 cents to $92.16 a barrel.

Brent's premium against U.S. crude widened toward US$7, from US$6.36 on Wednesday.

OPEC will only hold an emergency meeting if oil climbed above US$100 and remained there, although the group's Gulf members could informally add supply if needed, a delegate from a Gulf OPEC member state told Reuters on Thursday.

“We don't want the market to panic," the delegate told Reuters. "And if the prices reach US$100 and we see that there is a need of supply from our customers, Gulf countries will start producing above their quotas, but this has not happened yet."

Palladium climbed to a 10-year high above US$800 an ounce, bringing this week’s gains to 8% amid expectations of faster global growth, stable investment demand and optimism stemming from the Detroit auto show.

(BusinessDesk)

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