GLOBAL MARKETS-Shares gain on hopes for 'cliff' deal; gold tumbles

Thu Dec 20, 2012 4:59pm EST

* Wall Street bounces back despite Washington's bickering
    * Gold breaks below 200-day moving average
    * IntercontinentalExchange buys NYSE Euronext for $8 billion


    By Angela Moon
    NEW YORK, Dec 20 (Reuters) - Global shares rose on Thursday
as lawmakers in Washington continued to slog on in their
negotiations over the U.S. "fiscal cliff," while gold prices
tumbled to their lowest level since August on a burst of
year-end selling.
    Wall Street rebounded from early losses, after Republican
House of Representatives Speaker John Boehner said he would keep
working on a solution to the "fiscal cliff" while also slamming
President Barack Obama's approach to the budget talks.
    Republicans in the House pushed ahead with their own plan to
avoid a series of steep tax hikes and spending cuts due in early
2013, complicating negotiations with the White House. Obama has
vowed to veto the plan, which would raise taxes only on the
wealthiest sliver of Americans. 
    "Speaker Boehner went on the air and basically told us he
doesn't like what the president's doing or not doing, and the
markets rallied on that, which was kind of weird," said Stephen
Guilfoyle, a trader at Meridian Equity Partners in New York.
    Investors have hoped for an agreement soon, but progress has
been slow. Boehner said he expected to continue to work with
Obama, but repeated his charge that the president and Senate
Democrats were trying to "slow walk" the country over the fiscal
cliff. 
    The lack of progress in Washington kept most markets in a
virtual holding pattern. Currencies held to tight ranges in thin
pre-holiday trade, and the euro see-sawed against the dollar. In
commodities markets, U.S. crude oil futures edged higher while
Brent futures slid in choppy trade.
    The Dow Jones industrial average was up 59.75 points,
or 0.45 percent, at 13,311.72. The Standard & Poor's 500 Index 
 was up 7.88 points, or 0.55 percent, at 1,443.69. The
Nasdaq Composite Index  was up 6.02 points, or 0.20
percent, at 3,050.39. 
    NYSE Euronext was the day's biggest gainer, surging
34.1 percent to $32.25, after IntercontinentalExchange Inc
 said it would buy the operator of the New York Stock
Exchange for $8.2 billion. ICE shares rose 1.4 percent to
$130.10. 
    MSCI's world equity index, which has risen
steadily over the past five weeks on optimism that a budget deal
would clear the way for stronger growth in 2013, was up 0.2
percent to near 343 points on Thursday. It remains near levels
last seen in July 2011.
    In Europe, shares stuttered as indexes approached levels
considered overbought. The FTSEurofirst 300 closed
virtually unchanged at 1,142.80 points. The 14-day relative
strength index, a widely used technical momentum indicator,
stood at 67.5, close to the 70 and above level that is
considered "overbought."
    In currency markets, investors struggled to gauge
developments on the U.S. budget talks against a backdrop of
generally positive U.S. economic data.
    The euro recouped earlier losses to gain 0.1 percent at
$1.3226. On Wednesday, the euro hit an 8-1/2-month high
of $1.3308. Still, market players were mostly positioned for a
U.S. deal to be reached on time, with some expecting the euro to
go as high as $1.3500 by early January.
    
    GOLD TUMBLES
    Gold prices plunged below $1,650 an ounce, falling more than
1 percent as heavy liquidation by hedge funds and signs of an
improving U.S. economy triggered a technical sell-off that sent
prices to their lowest in four months.
    Gold broke below its 200-day moving average as safe-haven
bidding faded after a government report showed the U.S. economy
grew at a faster-than-expected 3.1 percent annual rate in the
third quarter. 
    Silver dived 4 percent, and platinum group metals fell 
around 2 percent.
    "There is a concern among the hedge funds that they will
have more redemptions because of the fact that they
underperformed the markets this year as a whole," said Jeffrey
Sica, chief investment officer of SICA Wealth Management, which
has over $1 billion in assets.
    Spot gold was down 1.3 percent at $1,645.10 an ounce,
having hit a low of $1,635.09, the weakest since Aug. 22.
    Silver, which tends to have higher volatility than
gold, was down 4.1 percent to $29.71, having hit a four-month
low of $29.60 an ounce.
    U.S. Treasuries prices pared earlier gains as Wall Street
stocks climbed to session highs on revived optimism about a
coming budget deal that will avert a U.S. fiscal crisis, which
curbed some bids for bonds. The benchmark 10-year U.S. Treasury
note was up 1/32, with the yield at 1.8014 percent.
    In the oil market, U.S. crude settled 0.17 percent
higher at $90.13 a barrel, after trading between $89.26 to
$90.54 a barrel in a thin market. Brent crude settled
slightly lower, however, down 16 cents at $110.20 a barrel. Both
crude futures posted a weekly gain.
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