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* U.S. fiscal talks the big driver of global markets
* U.S. Treasuries prices rise as debt talks drive safety bid
NEW YORK, Nov 29 U.S. stocks and the euro pared
gains on Thursday as risk aversion rose after top Republican
lawmaker John Boehner said there had been no substantive
progress in the last two weeks in talks to reach a budget deal
that would avoid the "fiscal cliff."
Boehner, the speaker of the U.S. House of Representatives,
said he had no idea what compromises the White House is willing
to make on spending cuts, following a meeting with U.S. Treasury
Secretary Timothy Geithner. He said Geithner, the White House's
top liaison to Congress, gave no new substantive plan for
finding a deal on the budget.
Boehner's comments rattled investors who had earlier driven
a benchmark world stock index to a three-week high alongside a
rally in the euro and commodities on hopes that U.S. political
leaders would reach a deal to avert $600 billion in spending
cuts and tax hikes that are seen as a threat to the U.S.
"When the sentiment is that nothing is going to get done, it
does create a lot of anxiety and selling pressure. If there's
any sense of progress, then the market seems to rally," said
Eric Kuby, chief investment officer at North Star Investment
Management in Chicago. "I think we're hostage to this for the
rest of the year."
The fiscal cliff is the biggest risk facing global markets
in the final weeks of the year, following an agreement earlier
this week on fresh aid for Greece.
The Dow Jones industrial average was up 33.11 points,
or 0.25 percent, at 13,018.22. The Standard & Poor's 500 Index
was up 5.43 points, or 0.39 percent, at 1,415.36. The
Nasdaq Composite Index was up 17.06 points, or 0.57
percent, at 3,008.84.
The MSCI global equities index was up 0.9
percent at 332.25 points, after earlier touching its highest
level since Nov. 7.
The FTSE Eurofirst 300 index closed up 1.1 percent,
with the close of stock markets there almost coinciding with
Boehner's comments. It was the highest close for the benchmark
European index since July 2011. Mining stocks, which are seen as
among the riskiest equity sectors because they are more
sensitive to changes in economic sentiment, were the best
Good demand at a bond sale by Italy, where yields fell to
their lowest level in two years, added to signs the crisis in
the euro area has begun to ease and helped bolster optimism
earlier in the global day.
Traders said until a deal was done in Washington, share
markets were likely to remain skittish. U.S. government debt
prices rose on Thursday on safe-haven demand from investors who
were rattled about the progress of budget talks in Washington.
The benchmark 10-year U.S. Treasury note was up
4/32, with the yield at 1.6182 percent.
RISK FLOWS CHANGE
Safe-haven German government bonds fell as investors
returned to riskier assets before Boehner's comments, pushing
the benchmark 10-year debt yields up slightly to 1.37 percent
The better tone allowed Italy to auction successfully six
billion euros ($7.75 billion) of new five- and 10-year debt,
which was expected to complete Italy's funding needs for the
year. The yield on the 10-year bond was around
the lowest since November 2010.
Spain announced it would sell some more bonds at an auction
on Dec. 5, although it has completed raising all the money it
needs for this year.
Italian and Spanish debt have benefited in recent months
from the European Central Bank's pledge to buy sovereign debt if
countries ask for aid first. Though that has not happened yet,
the prospect of a central bank backstop has made investors
reluctant to sell and has pushed them back into those markets.
A fall in Italian and Spanish yields helped lift the euro
against the dollar by 0.2 percent to $1.2971, with the
hopes for a U.S. fiscal deal adding to support for the common
Commodity markets also got some support from the U.S. fiscal
deal hopes, while mounting tension in the Middle East bolstered
oil prices on supply concerns. U.S. crude oil futures
rose $1.58 to $88.06 a barrel, and Brent climbed $1.23
to $110.72 a barrel.
Spot gold was up 0.4 percent at $1,726.71 an ounce,
after a 1.3 percent tumble on Wednesday, the biggest daily
decline in nearly four weeks.
"Gold is being pulled higher on this prevailing optimism
over the fiscal cliff," said Ross Norman, chief executive of
bullion dealer Sharps Pixley in London.
(Reporting by Nick Olivari; Additional reporting by Rodrigo
Campos and Ed Krudy in New York and Richard Hubbard, Marc Jones,
Jon Hopklins and William James in London; Editing by Leslie