* Movement in 'fiscal cliff' negotiations; Wall St opens
* Japan LDP back in power after landslide election win
* Yen slumps to 20-month low vs dollar, 7-month low vs euro
By Angela Moon
NEW YORK, Dec 17 Global shares advanced on
Monday on encouraging signs over the weekend on "fiscal cliff"
negotiations in the United States, while a win by Japan's
conservative Liberal Democratic Party lifted the dollar to a
20-month high against the yen.
Sources familiar with the talks confirmed that Republican
House Speaker John Boehner proposed extending low tax rates for
anyone who earns less than $1 million, and rates would rise for
wages above that level. The move was slightly closer to
President Barack Obama's key demands as both sides try to avert
the tax hikes and spending cuts that are set to take effect in
the new year.
"There won't be a grand bargain or anything like that, but
at least there is continuing dialogue, and the market is going
to react positively to any news that there is some sort of a
agreement to actually have an agreement in Washington," said
Randy Frederick, director of trading and derivatives at the
Schwab Center for Financial Research.
Uncertainty over if and when a federal budget deal will be
done has kept investors cautious in what is already a normally
quiet trading period heading into year-end.
Investors are worried the economy could slide back into
recession if the full brunt of the tax and spending changes is
allowed, though most expect a deal will eventually be reached.
The MSCI world equity index rose 0.3 percent
The Dow Jones industrial average was up 54.67 points,
or 0.42 percent, at 13,189.68. The Standard & Poor's 500 Index
was up 8.28 points, or 0.59 percent, at 1,421.86. The
Nasdaq Composite Index was up 13.02 points, or 0.44
percent, at 2,984.36.
But the FTSE Eurofirst 300 index was down 0.3
percent, following a 0.5 percent decline in Asia share markets
The major debt markets, however, did take some encouragement
from the Boehner proposal on taxes, with the benchmark 10-year
U.S. Treasury note down 5/32 and the yield at 1.7196
If the S&P 500 sustains its gains through the session, the
index would snap a two-day losing streak. Despite the
uncertainty of fiscal cliff talks, the S&P has performed well in
the last month, grinding higher on mostly light volume.
Apple shares were down 1.3 percent at $503.06 after
the tech giant was hit with another downgrade, this time from
The biggest moves of the day came in the currency market
following a landslide election victory for Japan's LDP on
Sunday, which opened the way for a shift in economic strategy
to lift the world's third-largest economy out of recession.
The triumph was seen as piling pressure on the Bank of Japan
to ease further at its next policy meeting, which ends on
Thursday, setting the stage for an even bigger fall in the yen.
The dollar was last up 0.3 percent on the day at 83.75 yen
, having earlier hit 84.48 yen, its strongest since April
2011. This left it with the potential to target the 200-week
moving average at 85.008 yen.
The euro jumped to around 111.30 yen, its highest
since late March. It eased back as some funds liquidated long
euro positions, leaving it last up 0.3 percent at 110.25 yen.
Japan's Nikkei stock index bucked the downward trend
in Asian markets to close at an 8-1/2-month high on expectations
the weaker yen will boost exports by Japanese firms.