GLOBAL MARKETS-Stocks hit new highs; Portugal bond sale a success

Tue May 7, 2013 12:36pm EDT

* MSCI share index at highest since 2008; DAX at record high
    * German data lifts euro
    * Aussie dollar falls on RBA rate cut


    By Rodrigo Campos
    NEW YORK, May 7 (Reuters) - Major stock indexes in Germany
and the United States hit all-time highs on Tuesday after data
bolstered expectations that Germany has returned to growth, and
a successful bond sale in Portugal indicated the country is on
track to exit its bailout.
    The euro firmed against most currencies following the strong
data on German industrial orders. Earlier, the Reserve Bank of
Australia surprised markets with a cut in interest rates to a
record low, highlighting the pressure a stubbornly high currency
is putting on the resource-exporting economy.
    The MSCI index of global shares, which
tracks stocks in 45 countries, edged past its June 2008 high,
and Germany's DAX index notched a record high, topping the
previous high set in 2007.
    On Wall Street, the S&P 500 touched an intraday record high
of 1,623.74.
    The success of Portugal's first 10-year bond in more than
two years, in addition to putting the country on course to exit
its bailout on time, qualifies it for an ECB debt support
program. 
    Portugal was hoping to raise 3 billion euros from the
syndicated benchmark sale, for which European books alone closed
at 9 billion euros, Thomson Reuters news and information service
IFR reported, with bidders seeking a return of around 5.6
percent. 
    "What's nice to see is that this level, as well as
Portugal's secondary market yields, are all below the 6 percent
danger zone," said David Schnautz, debt strategist at
Commerzbank in New York.
    "If they don't overdo it, a 3 billion euro placement with a
strong order book would support Portugal's comeback story in the
market," Schnautz said. 
    In another sign of economic strength in Europe, Germany, the
region's largest economy, reported a rise in industrial orders
in March, confounding expectations for a drop. 
    Seasonally and price-adjusted data showed industrial orders
rising by 2.2 percent in March from the previous month.
Economists in a Reuters poll had expected orders to drop by 0.5
percent in March.  
    "The recovery is on its way. We have had two consecutive
strong increases now. Industry has left the worst behind it but
industrial production may still have shrunk in the first
quarter," said Rainer Sartoris of HSBC Trinkaus.
    The DAX became the first of the major European
indexes to breach the peaks set in 2007, rising as high as
8,173.19 points and following in the footsteps of the U.S. S&P
500 which has been setting record highs since mid-April. 
    In early afternoon trading in New York, the Dow Jones
industrial average rose 34.52 points or 0.23 percent, to
15,003.41, the S&P 500 gained 3 points or 0.19 percent,
to 1,620.5 and the Nasdaq Composite dropped 4.25 points
or 0.13 percent, to 3,388.72. 
    MSCI's global index edged past its June 2008
high after Japan's stock market, which had been closed on
Monday, soared in a delayed reaction to Friday's strong U.S.
jobs data. The global index was up 0.5 percent at 372.79.
    Recent gains in U.S. equities have come on strength in
technology and banking shares, sectors that are closely related
to an economy in expansion.
    "If this rotation into cyclical stocks from defensive ones
continues, that will be a very healthy sign for us," said Art
Hogan, managing director at Lazard Capital Markets in New York.
    He said, however, that Wall Street could drift along this
week with little in the U.S. data calendar to give the market
direction.
    "All the recent catalysts have been priced in and markets
are at a level they're comfortable with," Hogan said.
    With key economies like the United States seeing a patchy
recovery but others struggling to maintain growth, major central
banks around the world have shown over the last few weeks they
intend to keep stimulus flowing freely for the time being.
    Australia's central bank cut rates to a low of 2.75 percent
on Tuesday and suggested it may ease further. The move came
after the head of the European Central Bank, Mario Draghi, on
Monday reiterated the ECB's readiness to trim rates again if
needed, after a rate cut last week. 
    The growth-linked Aussie dollar was last at
US$1.0161, down 0.8 percent on the day.
    Spanish and Italian bond yields - a
proxy for borrowing costs - edged lower while safe-haven German
Bund yields were at a near four-week high. 
    U.S. Treasuries yields rose to three-week highs as traders
prepared for the sale of $32 billion in new three-year notes.
    Benchmark 10-year note yields rose to 1.78
percent, up from 1.76 percent on Monday and the highest since
April 12.
    Even so, many analysts see yields as unlikely to march
significantly higher, barring new signs that the economic
recovery shows greater resilience than expected.
    "One decent number is not strong enough to completely change
the mood of market players," said Jason Rogan, managing director
of Treasuries trading at Guggenheim Partners in New York. "We're
getting close to a point where you might start to see some
buying."
    Prospects the U.S. economy will lead global growth lifted
industrial commodities, although persistent worries about demand
from top consumers such as China tempered gains. 
    Three-month copper hit a three-week high of $7,374 a
ton, but pared gains and was recently up 0.1 percent at
$7,280.25. Copper on Monday posted its largest daily percentage
gain since October 2011, though prices are more than 8 percent
lower for the year.
    Brent crude oil prices were choppy after three days of
strong gains, supported by strong German data, central bank
policy and tension in the Middle East. 
    Brent was last off 0.3 percent at $105.14 while U.S. crude
 shed 0.6 percent to $95.56.
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