REFILE-GLOBAL MARKETS-Stocks, euro rise after Cyprus banks reopen

Thu Mar 28, 2013 3:16pm EDT

* S&P trades above record closing high
    * Euro edges up from 4-month low vs U.S. dollar
    * European shares rebound as Cyprus tensions ease
    * Trading subdued before Easter holiday weekend

    By Ellen Freilich
    NEW YORK, March 28 (Reuters) - Major stock markets
recovered, with the benchmark S&P 500 stock index trading above
its record closing high, and the euro edged off a four-month low
on Thursday, as banks in Cyprus reopened to relative calm
following the island's controversial bailout.
    Stocks rose on Wall Street, setting the stage for a record
close. The record closing high on the S&P is 1,565.15, set on
Oct. 9, 2007. 
    There was little sign of the mass panic some feared would
occur as banks reopened in Cyprus following a forced closure
lasting nearly two weeks. Banks opened with tight capital
controls in place to keep depositors from withdrawing all their
money. 
    Investors "breathed a sigh of relief that the world didn't
end when Cyprus reopened its banks," said Patrick Chovanec,
chief strategist at Silvercrest Asset Management Group in New
York, which has $11.5 billion in assets under management.
    The euro rebounded from a recent four-month low against the
dollar as month- and quarter-end flows had investors covering
bets against the euro. But analysts saw the move as tenuous amid
concern the Cyprus crisis and political concerns in Italy could
encourage anxious investors to sell euro zone assets and seek
the safety of the U.S. dollar.
    "The concern is we are five years into the euro zone crisis
and still lurching from crisis to crisis," Chovanec said. "These
economies need to grow their way out of debt and the question 
is where will the growth come from?"
    Cyprus's 10 billion euro rescue deal with its European
partners at the weekend is the first euro zone bailout to impose
losses on bank depositors and has raised the prospect of savers
withdrawing money from banks.
    The decision to include senior debt holders and large
depositors in the Cyprus bailout could have a "lasting effect"
on the way investors perceive weaker euro area banks, said 
Barclays analysts Rajiv Setia and Laurent Fransolet in a
research note.
    European Central Bank data showed that some customers began
to take money out of their accounts in February on the
possibility that depositors would take a haircut in a bailout
deal. But the calm as bank employees returned to work helped
settle early market jitters. 
    The euro, which has dropped around 2.0 percent over
the last couple of weeks, rose above $1.28 on Thursday, up from
a four-month low against the U.S. dollar and a one-month
low against the yen 
    Uncertainty has been amplified by an unexpected rise in
German unemployment in March that was reported on Thursday, the
lack of a government in Italy following inconclusive elections
and typical end-of-quarter caution before the Easter holiday.
But Germany's unemployment rise was countered by stronger retail
sales and a surprise rebound in Italian business confidence.
 
    European stock markets shrugged off early nerves though as
the calm in Cyprus was reported. With benchmark stock indexes in
London, Frankfurt and Paris all higher, the FTSEurofirst 300
 rose 0.6 percent.
    U.S. Treasuries and German government bonds - 
assets that investors turn to for safety - slipped.
    Benchmark 10-year Treasury notes last traded
down 2/32 in price to yield 1.858 percent, up 0.8 basis point
from Wednesday's close. The Treasury's $29 billion sale of
seven-year Treasury notes got a fairly weak reception.
    Treasuries remained weak after the U.S. government raised
its reading on U.S. economic growth in the fourth quarter of
2012, while reporting a bigger-than-expected rise in weekly
jobless claims in the latest week.
    Gold slipped below $1,600 an ounce on Thursday, as banks
reopened in Cyprus without panic, sapping demand for low-risk
assets.
    Gold hit a one-month high of $1,616.36 last week on concerns
the $10 billion euro rescue deal for Cyprus, which will leave
big depositors and private bondholders with huge losses, could
become a template for future bank bailouts in the euro zone.
    Gold was down 0.4 percent at $1,598.41 an ounce by
1617 GMT. Spot prices were still set for a one percent gain in
March, their first monthly rise in six months. U.S. gold futures
 dropped 0.67 percent to $1,595.40 an ounce.
 
    U.S. crude futures hovered above $96 a barrel. NYMEX crude
for May delivery was up 2 cents at $96.60 a barrel by
1620 GMT.
    London Brent crude for May delivery was down 6 cents
at $109.09 after finishing 33 cents higher at $109.69 a 
barrel the previous session.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article