REFILE-GLOBAL MARKETS-Stocks mixed after major U.S. indexes hit 5-year highs

Tue Jan 22, 2013 10:41am EST

* BOJ makes open-ended commitment to buy assets from 2014
    * MSCI world share index hits new 20-month high
    * Yen falls briefly after BOJ but then reverses course
    * Oil and gold edge higher

    By Ellen Freilich
    NEW YORK, Jan 22 (Reuters) - U.S. stocks were mixed on
Tuesday after major Wall Street stock indices hit five-year
highs and Japan promised a program of open-ended monetary easing
to revive its listless economy.
    Analysts said investors held back on making large bets 
before a batch of corporate earnings. Both the Dow and S&P 500
closed at their highest levels since December 2007 on Friday,
spurred by a strong start to earnings season.
    In early dealings in New York, the Dow Jones industrial
average was down 6.15 points, or 0.05 percent, at
13,643.55. The Standard & Poor's 500 Index  was down 1.62
points, or 0.11 percent, at 1,484.36. 
    The Nasdaq Composite Index  was down 2.52 points, or
0.08 percent, at 3,132.18.
    U.S. markets were closed on Monday for a public 
holiday.
    Despite stronger-than-expected financial results from 
major companies, including big banks, at the start of the 
quarterly reporting season, many investors are worried that 
other earnings reports will reflect economic uncertainty in the 
fourth quarter.
    A flare-up of concern about Germany's banks had limited
impact. Safe-haven U.S. debt was down in price and benchmark
10-year yields rose to 1.87 percent from 1.85 percent late on
Friday, before a three-day holiday weekend.
    The Bank of Japan, which has been under intense political
pressure to overcome deflation and generate growth, hiked its
inflation target to 2 percent and said that from 2014 it would
adopt an open-ended commitment to buy assets. 
    The move surprised markets, which had expected another
incremental increase in its 101 trillion yen ($1.12 trillion)
asset-buying and lending programme, though the delay before the
easing measures kick in dulled the impact and saw the yen edge
higher against the dollar.
    European shares, testing two-year highs in recent days, were
choppy as markets latched on to a report that German regulators
were simulating a separation of some banks' operations, and on
rumors - later denied - that Deutsche Bank was
preparing a profit warning.
    Frankfurt's DAX fell as much as 1.4 percent on the
talk but then erased about half of that loss.
    The pan-European FTSEurofirst 300 was down just 0.1
percent on the day at 1,165.
    This is a busy week for U.S. earnings, with Google Inc
, IBM, and Texas Instruments all on tap
to report Tuesday. Tech earnings will be a particular focus
after a disappointing sales outlook from Intel Corp 
last week. 
    A better-than-expected reading from the German ZEW investor
sentiment index helped the recovery in European shares. It rose
sharply for a second consecutive month in January in a sign that
the euro zone crisis is no longer hitting Europe's largest
economy as hard as in late 2012. 
    "There was a slight scare in Germany this morning which we
saw particularly in the euro/dollar move but we have more or
less recovered from that now," said Rabobank strategist Philip
Marey.
    "The market is now looking to the U.S. open and today's
data. The Richmond Fed index could underline the uncertainty
businesses are facing not only from abroad but also from Capitol
Hill (budget negotiations). But hopefully the homes sales data
will be the more positive story."
    Equity markets, particularly in Japan, had risen strongly in
the run-up to Tuesday's BOJ meeting, and the confirmation of the
central bank's plans was enough to lift the MSCI world index
 0.15 percent to a fresh 20-month high of 352.54
before momentum waned.
    Brent crude rose 0.4 percent to $112.20 a barrel,
and gold was up 0.2 percent as the BOJ's easing action
added to recent positive data from the United States and China,
while growing confidence in the strength of China's economic
recovery pushed copper up 0.5 percent to $8,100 a tonne.
   
  

    SPAIN GAINS
    General market sentiment was also supported by signs of a
compromise to avert a U.S. fiscal crisis.
    Republican leaders in the U.S. House of Representatives have
scheduled a vote on Wednesday on a nearly four-month extension
of U.S. borrowing capacity, aimed at avoiding a fight over the
looming need to raise the federal debt ceiling.
    Bond market investors also gobbled up a new 10-year Spanish
bond, its first since November 2011, as the latest evidence of
rising confidence following the European Central Bank's promise
to buy Spain's bonds if necessary. 
    Last week, Rome sold 6 billion euros of its first 15-year
bond in more than two years, and Spain's Economy Minister Luis
de Guindos said Tuesday's sale by his country drew estimated
demand of around 24 billion euros, describing the sum as
unprecedented.
    A government source close to the deal said Madrid would,
however, sell no more than 7 billion euros so as to leave
appetite in the market. 
    "I'm under the impression that the (Spanish) Treasury is
making the most of a benign market to increase its liquidity for
whatever comes in the future," said Estefania Ponte, economist
at Cortal Consors.

    GOOD DAY AT THE ZEW
    The upbeat German ZEW release, which put German investor and
analyst morale at a 2-1/2 year high, prompted a fall in German
government bonds and lifted the euro out of
slide caused by the German bank jitters. 
    The single currency remained down 1 percent on the day
against the yen at 118.3 yen, however. Disappointment
that there will be no immediate BOJ easing saw the yen
strengthen across the board. 
    The dollar also fell 1 percent against the yen to a session
low of 88.365 yen.
    "There was some disappointment in markets that the BOJ would
start their open-ended bond purchases only in January 2014, so
we see some profit taking in dollar/yen," said Bernd Berg,
global FX strategist at Credit Suisse.
    In Britain, sterling fell for the fifth straight session to
hit an 11-month low against the euro, weighed down by a bleak
outlook for the economy and public borrowing figures that
reinforced fears it could lose its prized triple-A rating.
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