* ECB predicts euro zone weakness, hitting euro, oil prices
* U.S. stocks rise as investors keep eye on 'fiscal cliff'
* Europe's FTSEurofirst 300 index up 0.7 pct to 18-month
By Herbert Lash
NEW YORK, Dec 6 Oil prices slipped and the euro
fell the most in a month on Thursday after the European Central
Bank said growth in the euro zone is likely to shrink next year,
sparking speculation of an interest-rate cut.
But global shares edged higher, with the three major U.S.
stock indexes getting a modest lift as investors watched for
signs of progress in the "fiscal cliff" talks and Apple's stock
rebounded a day after its worst one-day percentage loss in
nearly four years.
In Europe, the FTSEurofirst-300 index of regional shares
closed at an 18-month high.
German bonds rallied and Brent crude oil fell near $107 a
barrel after ECB President Mario Draghi said policymakers held a
wide discussion on interest rates, leaving the door open to a
possible cut in borrowing costs next year.
The ECB left rates on hold, but the bank's new staff put
projections on gross domestic product in a range of a declining
0.9 percent to growing just 0.3 percent next year, suggesting
contraction is far more likely than not.
"The underlying reason for euro weakness is still there, and
the ECB's warnings of continued weakness over the next year
could be the catalyst for a continued euro drop," said Neal
Gilbert, market strategist at GFT in Grand Rapids, Michigan.
The euro fell 0.80 percent to $1.2962, while the U.S.
dollar index rose 0.61 percent to 80.263.
Brent crude fell $1.78 to settle at $107.03.
The March 2013 Bund future, which became the
front-month contract during the session, rallied more than half
a point to a session high of 145.74. Yields on the 10-year
German bond fell to 1.29 percent, their lowest
since late August.
U.S. stocks edged higher in choppy trading, but traders kept
an eye on Washington and negotiations to avert some $600 billion
of tax hikes and spending cuts scheduled to start in January if
Congress fails to reach an agreement on deficit reduction.
President Barack Obama was taking his "fiscal-cliff"
campaign to the home of a family in northern Virginia to
illustrate the impact of letting taxes on the U.S. middle class
rise as signs emerge that Republicans are contemplating a change
in strategy in their battle with Democrats over deficit
The office of U.S. Senator Jim DeMint, a conservative
Republican from South Carolina and a favorite of the Tea Party
wing of the party, said he will resign in January to run the
Heritage Foundation, a conservative think tank.
Upbeat guidance from Broadcom and Apple's turnaround helped
lift technology stocks. Apple erased initial losses of as much
as 3.7 percent at the open, which briefly pulled its market
capitalization below $500 billion, to climb 1.12 percent to
Bruce Zaro, chief technical strategist at Delta Global Asset
Management in Boston, said the market was "really being held
hostage to (the fiscal cliff negotiations) and the stock action
The number of Americans filing new claims for unemployment
benefits last week fell to the pre-superstorm Sandy range,
suggesting a return to modest job growth after a storm-related
setback. It was the third straight weekly
The Dow Jones industrial average was up 4.72 points,
or 0.04 percent, at 13,039.21. The Standard & Poor's 500 Index
was up 0.98 points, or 0.07 percent, at 1,410.26. The
Nasdaq Composite Index was up 7.66 points, or 0.26
percent, at 2,981.36.
MSCI's all-country world equity index rose 0.11 percent to
333.43, while European stocks hit fresh 2012 highs and some
traders eyed more rallies after equity indexes broke key
The FTSEurofirst 300 index of top European shares
hit an 18-month closing high at 1,131.85, up 0.69 percent for
the day, with bullish technicals, an improving global outlook
and attractive valuations raising equities' appeal.
"We still have some risks, but the magnitude of the risks
has diminished and they are being handled in a better way," said
Ben Hauzenberger, a fund manager at Zurich-based Swisscanto
Benchmark U.S. Treasury yields dipped to near their lowest
in three weeks, supported by expectations that the Federal
Reserve will announce a new bond-purchase program when it meets
The benchmark 10-year U.S. Treasury note rose
3/32 in price to yield 1.5806 percent.
U.S. crude futures fell after the ECB's lowered growth
forecast for the euro zone reinforced worries about demand for
oil and strengthened the dollar.
U.S. crude for January delivery fell $1.62 to settle
at $86.26 a barrel.