Euro climbs on ECB; stocks rise before jobs data

NEW YORK Thu Oct 4, 2012 4:41pm EDT

1 of 2. Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange September 28, 2012.

Credit: Reuters/Remote/Marte Kiessling

NEW YORK (Reuters) - The euro hit a two-week high against the dollar on Thursday and global shares gained after the head of the European Central Bank reiterated a commitment to preserve the euro.

U.S. data showing the number of Americans filing new claims for unemployment benefits rose only slightly after a big drop the prior week added to the positive tone in equity markets. The data came a day before the government's closely watched monthly report on the job market.

Oil prices rallied 4 percent a day after registering a steep fall as Turkey's retaliatory strikes on Syria heightened tensions in the Middle East, while U.S. gasoline futures rallied following a fire at a refinery in Texas.

ECB President Mario Draghi, speaking after the bank held benchmark lending rates steady at 0.75 percent, said "the euro is irreversible." He also said the ECB is ready to buy the bonds of troubled euro-zone economies that ask for it.

"What strikes me was Draghi reiterating his commitment to preserve the euro, and that has eased break-up concerns," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "His commitment to the bond-buying plan was a positive for the euro as well."

The euro rose 0.9 percent to $1.3015. It earlier traded as high as $1.3031, the highest level since September 21. Against the yen, the euro gained 0.8 percent to 102.12 yen.

The S&P 500 extended gains for a fourth day on Thursday.

The Dow Jones industrial average .DJI closed up 80.75 points, or 0.60 percent, to 13,575.36. The Standard & Poor's 500 Index .SPX ended up 10.41 points, or 0.72 percent, to 1,461.40. The Nasdaq Composite Index .IXIC gained 14.23 points, or 0.45 percent, to 3,149.46.

The Federal Reserve released minutes from its September policy meeting that revealed some reservations about the U.S. central bank's latest stimulus. Market reaction was muted. The Fed may adopt numerical thresholds for inflation and joblessness that would serve as guideposts for policy, according to the minutes.

The MSCI global stock index .MIWD00000PUS edged up 0.8 percent to 335.77. Europe's FTSEurofirst 300 index .FTEU3 closed down 0.1 percent at 1,100.33, weighed by the gloomy economic sentiment in Europe.

Speculation that Friday's U.S. jobs data will show stronger-than-expected growth in September weighed on Treasury prices. The benchmark U.S. 10-year note was down 16/32, its yield rising to 1.6715 percent.

"Some accounts believe the payrolls data will be better than the consensus forecast," said Tom di Galoma, managing director at Navigate Advisors LLC, noting a report from consultants Challenger, Gray & Christmas showing planned job cuts announced for the month of September hit a 15-year low.

Brent crude rose $4.41 to settle at $112.58 per barrel, a day after falling to its lowest price since September 20. U.S. crude climbed $3.57 to settle at $91.71, after dropping to its lowest since August 3 on Wednesday.

Turkey's military hit targets inside Syria for a second day on Thursday after a mortar bomb fired from Syrian territory killed five Turkish civilians, marking the most serious cross-border escalation of the 18-month-old uprising in Syria.

Weakness in the U.S. dollar, which fell 0.8 percent against a basket of currencies .DXY, also supported dollar-denominated commodities like oil.

"Turkey's strikes on Syria caused the short covering after yesterday's losses in crude, and the stock market rise and weak dollar also were factors," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

Spot gold rose to an 11-month high of $1,794.40 and last traded at $1,790.60 an ounce.

(Additional reporting by Gertrude Chavez-Dreyfuss and Rodrigo Campos in New York; Editing by Leslie Adler)

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