U.S. shares end flat as Spain factor fades; oil up
NEW YORK (Reuters) - Stocks and the euro ended a week of slight moves with limited action on Friday, as a late-day sell-off on Wall Street indicated continued concerns about the economy's growth prospects and Europe's debt crisis.
Equities rose for much of the session on expectations that Spain was taking steps to seek a bailout, helping for a time to quell worries about Europe's lingering debt crisis. The benchmark S&P 500 and the Dow, however, ended the day marginally lower, while the Nasdaq eked out a small gain.
Oil prices rose on supply worries over tensions in the Middle East and delays in North Sea shipments. Brent crude climbed 1.3 percent above $111 a barrel, but still finished posted a drop of 4.5 percent on the week.
The euro rose less than 0.1 percent against the dollar. Volume was thin ahead of the weekend and the expiration of options contracts contributed to the late-day volatility.
Traders said the euro may struggle to extend gains amid uncertainty over the timing of a potential bailout in Spain.
"The Spain news was relatively small," said Joseph Greco, managing director of Meridian Equity Partners in New York, though he said "the euro-dollar currency play resulting from that news was definitely something that we spoke about. But it has been a lot of back and forth. I don't anticipate there will be much more room there."
Sources with knowledge of the matter said Spain was considering speeding up a planned rise in the retirement age as it races to cut spending and meet conditions of an expected international sovereign aid package. The sources also said Spain may freeze pensions, something that the country's deputy prime minister later denied.
Germany's finance minister, Wolfgang Schaeuble, dented expectations, however, by saying that Spain did not need a sovereign bailout on top of the package already agreed for its banks because it was on the right path to regain the confidence of markets.
Apple Inc (AAPL.O), the most valuable U.S. company, rose 0.2 percent as it debuted the latest version of its iPhone worldwide. The stock hit a record high of $705.07 before pulling back to close at $700.09.
The Dow Jones industrial average .DJI was down 17.46 points, or 0.13 percent, at 13,579.47. The Standard & Poor's 500 Index .SPX was down 0.11 points, or 0.01 percent, at 1,460.15. The Nasdaq Composite Index .IXIC was up 4.00 points, or 0.13 percent, at 3,179.96.
For the week, the Dow unofficially fell 0.1 percent, the S&P lost 0.4 percent, and the Nasdaq fell 0.1 percent. The S&P remains up 16 percent on the year, gains that have come on concerted central bank economic stimulus measures, though investors are now looking for reasons to keep pushing equities higher.
European shares .FTEU3 closed up 0.4 percent after having briefly tested 14-month highs earlier. Banks led gains, driven by Spanish banks BBVA (BBVA.MC) and Banco Santander (SAN.MC) on the expectations for progress in solving Spain's debt problem.
The MSCI global index .MIWD00000PUS climbed 0.3 percent.
The euro, which has lost around 1.5 percent since hitting a 4-1/2-month high a week ago, was up 0.1 percent at $1.2983, having briefly climbed back above the psychologically important $1.30 mark.
The dollar fell less than 0.1 percent against a basket of currencies .DXY to 79.352, bringing it closer to the 6-1/2-month low of 78.601 hit last week in the wake of aggressive monetary easing by the U.S. Federal Reserve.
With all eyes on whether Spain will call for aid, support for the euro was seen at Thursday's low, which stood just above its 233-day moving average at $1.2915.
Markets brushed off a well-flagged report from the UK showing that plans to reduce its deficit have fallen behind target as the European debt crisis has hit global growth.
The news followed Italy's warning late on Wednesday that its recession will be far more severe than forecast, making it harder to reduce the country's debt burden.
Underlining fears about faltering global growth, the World Trade Organization cut its global trade growth forecast to 2.5 percent from 3.7 percent on Friday. The new forecast, dragged down by Europe, would put trade growth at less than half of the previous 20-year average.
In bond markets, the benchmark 10-year U.S. Treasury note was up 4/32 in price for a yield of 1.751 percent.
Yields on Spain and Italy's 10-year bonds were slightly higher, while demand for German government bonds also eased as investors adjusted positions ahead of the weekend amid the growing speculation that Spain is preparing for a bailout. December Bund futures settled at 140.14, down 0.05 percent.
The ECB's new plan that requires struggling countries to submit to fiscal rehabilitation programs in order to qualify for bond-buying support in the open market has been a key factor in the sharp drop in Italian and Spanish borrowing costs and the 15-20 percent surge in major stock markets.
(Editing by Leslie Adler)