* Euro rises on speculation euro zone will remain intact
* Bonds fall on profit-taking, hedge against debt solution
* Stocks falter, then fall on still-gloomy economic data
By Herbert Lash
NEW YORK, June 4 The euro rallied and bonds
retreated from last week's record low yields o n M onday as
speculation increased that authorities will seek greater fiscal
integration in the euro zone.
U.S. stocks fell, but oil, copper and other commodities
rebounded as investors speculated that new action may be in the
works to address the debt crisis and keep Greece from leaving
the euro zone.
A rally in Europe's troubled banking sector lifted battered
Spanish, French and Italian stocks, with the euro zone's
blue-chip Euro STOXX 50 index closing up 0.5
percent. An index of the euro zone banking sector rose
The euro was 0.4 percent higher at $1.2480, off the
near two-year lows hit o n F riday.
German Chancellor Angela Merkel is pressing for much more
ambitious measures, including a central authority to manage
euro-area finances and major new powers for various European
entities. In Spain, Prime Minister Mariano Rajoy is pushing for
a direct European rescue of the country's troubled banks.
France and the European Commission signaled their support on
Monday for an ambitious plan to use the euro zone's bailout fund
as European officials try to reassure investors they can contain
an escalating crisis.
Senior European Union officials have promised decisions at a
summit at the end of June to resolve the 2-1/2-year debt saga to
deepen integration in the euro zone and underpin the common
currency, showing they are committed to its future.
Stocks on Wall Street zigzagged between losses and gains.
The Dow Jones industrial average was down 34.70
points, or 0.29 percent, at 12,083.87. The Standard & Poor's 500
Index was down 3.00 points, or 0.23 percent, at
1,275.04. The Nasdaq Composite Index was up 1.03
points, or 0.04 percent, at 2,748.51.
In thin European markets, the FTSE Eurofirst 300
index of top shares closed down 0.5 percent at 949.94 points.
The MSCI world equity index fell 0.4 percent
Traders took profits in safe-haven U.S. and German debt,
wary that a policy response to the euro zone's debt crisis might
be in the works.
"It's relatively difficult to be positive on these
developments," said Marius Daheim, senior fixed-income analyst
at Bayerische Landesbank.
"But we haven't given up because the past has also taught us
that European politicians usually move when things become really
dangerous. I think we are quickly moving toward this point."
The benchmark 10-year U.S. Treasury note was
down 19/32, the yield at 1.5223 percent.
The price of the 10-year German bond fell and
its yield rose to 1.215 percent.
Another factor on traders' radar was that potential monetary
easing may come from a meeting of the European Central Bank on
Wednesday, as some investors positioned for an outside chance of
a rate cut. Factory prices held steady in the euro zone in
April, giving the ECB some room to cut rates.
"They (the ECB) have made it clear that they want the
solution to come from Europe's leaders, but the recent
deterioration in economic data and slide in asset prices makes
easier monetary policy inevitable," said Kathy Lien, director of
currency research at GFT in Jersey City, New Jersey.
New orders for U.S. factory goods fell in April for the
third time in four months, the latest worrisome sign for the
Oil prices snapped a string of four lower finishes as a drop
to multi-month lows attracted bargain-hunters and as the euro
rose against the dollar on hopes that Europe's leaders can keep
the euro zone intact.
Brent crude futures rose 42 cents to settle at
$98.85 a barrel.
U.S. July crude rose 75 cents to settle at $83.98,
after earlier falling to $81.21, the lowest since prices were
last under $80 a barrel in October.
Spot gold prices fell $7.20 to $1,618.40 an ounce.