GLOBAL MARKETS-Verizon sells record bond deal; gold down as Syria fears ease

Wed Sep 11, 2013 1:00pm EDT

* Apple shares slide, weigh on tech sector
    * Verizon sells $49 billion in bonds
    * Unlocking of hedges for Verizon deal supports Treasuries
    * U.S. dollar near seven-week peak against yen


    By Ellen Freilich
    NEW YORK, Sept 11 (Reuters) - Fixed-income investors gobbled
up $49 billion in notes sold by Verizon, the largest-ever
corporate bond sale in history, while  global stocks rose
modestly and gold hit a three-week low on Wednesday as Syria
tensions eased.
    The reduced fears over Syria, after President Barack Obama
pledged Tuesday to explore a diplomatic plan by Russia to take
away Syria's chemical weapons, were having a less pronounced
effect on markets after several days of equity-market gains. 
    Verizon Communications Inc's massive bond deal was
sought by pension funds, endowments, institutional buyers and
wealth managers hungry for higher-yielding securities. 
    It comes at a time that many corporations and countries are
rushing to sell debt as they expect long-term interest rates to
rise when the U.S. Federal Reserve reduces its stimulus in
coming months. The Fed will hold a policy meeting next
week. 
    Verizon sold the bonds to partly finance its $130 billion
buyout of its wireless operations, Verizon Wireless, from
Vodafone. 
    "The sheer size of this deal is impressive in and of
itself," said Bonnie Baha, who heads Global Developed Credit at
DoubleLine. "It just goes to show that despite the specter of
higher Treasury rates going forward, investor demand remains for
attractively priced corporate credit deals."
    Underwriters of the Verizon deal exited hedges that they had
put on in the last couple of days, undertaken to offset their
exposure to the massive Verizon offering, supporting Treasuries
prices.
    
    SYRIAN CONCERNS REMAIN
    Jitters over Syria have not been washed away entirely. Obama
voiced skepticism about Russia's plan to take control of Syria's
chemical arsenal and sought support for using force should
diplomacy fail.
    "That is going to cause a little bit of angst, it won't
cause the market to implode. The only reason that would happen
is if these diplomatic efforts fail once again and the prospect
of a real strike looms large again," said Ken Polcari, director
of the NYSE floor division at O'Neil Securities in New York.
    The Federal Reserve's highly anticipated policy meeting next
week, on Sept. 17-18, kept trading in check, with currency and
the U.S. government debt markets keenly awaiting whether the Fed
will begin to reduce its bond-buying program.
    On Wall Street, Apple Inc's shares were down about
5.8 percent a day after it unveiled a high-end iPhone with a
fingerprint scanner as well as a cheaper model targeted at
emerging markets.
    The Dow Jones industrial average rose 91.56 points or
0.6 percent, to 15,282.62, the S&P 500 gained 1.68 points
or 0.1 percent, to 1,685.67 and the Nasdaq Composite 
dropped 9.073 points or 0.24 percent, to 3,719.948.
    The price of the lower-end iPhone was higher than expected
and raised concerns that Apple was not fighting hard enough
against Google Inc's market-dominating Android
operating system. Three brokerages downgraded their ratings on
Apple shares. 
    Globally, MSCI's 45-country world index rose
0.26 percent.
    U.S. Treasury yields fell ahead of the Treasury's sales of
$21 billion in 10-year notes, the second sale in $65 billion
worth of new supply this week.
    Benchmark 10-year notes rose 3/32 in price.
Their yields eased to 2.96 percent from 2.97 percent on Tuesday
and a two-year high of 3.01 percent on Friday.
    Oil recovered some ground with Brent crude at
$111.58, above a 2-1/2-week trough of $110.59. The steadier
performance came after a 4 percent drop in the past two
sessions, its largest two-day fall since June.
    Gold inched up to $1,362.90 an ounce having slid to a
three-week low of $1,356.85.
    In Europe, Britain's unemployment rate dipped to its lowest
level since late 2012 in the latest sign its economy is picking
up. 
    Sterling rose to a seven-month high against both the dollar
 and the euro, and to a four-year high against
the weakened Japanese yen, on the view the Bank of
England might raise rates sooner than has been expected. 
    The FTSEurofirst 300 pan-European share index stood
0.53 percent higher.
    Benchmark German government bonds tracked
minor gains by U.S. Treasuries.
    Italy's benchmark yields rose above Spain's for the first
time in 18 months amid concern about political instability and
about Italy's banks before an examination of all euro zone banks
by the European Central Bank in coming months. 
    Rome sold 11.5 billion euros of treasury bills at its
highest rate in over nine months. 
    
    YEN HOVERS NEAR LOWS
    The yen hovered near recent lows as the easing tensions over
Syria dented demand for the safe-haven Japanese currency, while
uncertainty about the Federal Reserve's stimulus plan kept the
dollar range-bound.
    The yen hit a seven-week low against the dollar and a
3-1/2-month trough versus the euro, before recovering losses. 
    Traders said uncertainty about Syria and the Fed could keep
major currencies in a range. The U.S. central bank will announce
its policy decision as the close of its meeting next Wednesday,
and investors will look for details on the pace and timing of
the central bank's plans to scale back its bond-buying program.
    "Until we can get through that meeting and see what the Fed
says, we're expecting continued consolidation here," said Eric
Viloria, currency strategist at Forex.com.
    The dollar was last down 0.33 percent at 100.08 yen, 
according to Reuters data. Analysts said the dollar would likely
hold above the 100 yen level in coming sessions.
    The euro was down 0.14 percent at 133.10 yen,
having hit an intra-day peak of 133.36 yen, its highest since
May 22.
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