* Italian Prime Minister resignation plans pressures euro
* Italian shares, bonds tumble, U.S. stocks up as fiscal
* Oil, copper firm after China data
By Wanfeng Zhou
NEW YORK, Dec 10 The euro fell against the yen
while Italian stocks and bond prices sank on Monday after
Italy's Prime Minister Mario Monti said he would resign, raising
concern about who will lead the euro zone's third biggest
economy out of the debt crisis.
But U.S. shares shrugged off the news out of Italy, trading
slightly higher as investors awaited any sign of progress in
talks to avert the United States' so-called fiscal cliff of tax
hikes and spending cuts.
Monti announced over the weekend he would resign once the
2013 budget is approved, potentially bringing forward an
election due early next year. The competent economist has become
an investor favourite over the last year for guiding through a
string of reforms.
The news pushed Italy's benchmark 10-year bond yield to 4.83
percent, the highest in roughly more than three
weeks. Italian shares fell more than 2 percent, with
banks hit hard because of their hefty domestic government bond
"The political situation in Italy just adds to the
uncertainty in Europe and this will have a negative impact on
the euro in the coming months," said Matthew Lifson, senior
trader and analyst at Cambridge Mercantile Group in Princeton,
The euro fell 0.2 percent to 106.42 yen. It
dropped as low as 105.94, its weakest in about two weeks.
But the euro was able to erase losses against the dollar and
trade little changed at $1.2923.
Some analysts noted that the bond and currency markets'
reaction to Italy's news may have been overdone given the fact
that Monti would have called for elections in a few months time
anyway. Monti's decision simply expedites the process.
On Wall Street, the Dow Jones industrial average
gained 25.78 points, or 0.20 percent, to 13,180.91. The Standard
& Poor's 500 Index rose 0.47 points, or 0.03 percent, to
1,418.54. The Nasdaq Composite Index added 8.24 points,
or 0.28 percent, to 2,986.28.
Gains in U.S. stocks helped European markets erase losses.
Top European shares on the FTSEurofirst 300 index last
traded 0.1 percent higher at 1133.64.
The MSCI global stock index rose 0.1 percent
U.S. Treasury debt prices rose on concerns over protracted
budget negotiations in Washington, political rumblings in Italy
and expectations for further monetary policy easing by the
The benchmark 10-year U.S. Treasury note was up 3/32, with
the yield at 1.613 percent.
The Fed is expected to announce a new round of Treasury
securities purchases at the end of a two-day meeting on
Wednesday, according to a Reuters poll. The bond buying would
replace the "Operation Twist" stimulus, which expires at the end
Offsetting the European concerns were data from China which
showed factory output in the world's number two economy
accelerated to an eight-month high in November.
Copper prices hit their highest in almost two months
on the upbeat Chinese sentiment, gold rose to around
$1,712 an ounce and oil snapped five straight days of losses to
climb back towards $108 a barrel.