* Spanish bond yields rise through 6 percent, U.S. Treasury
* U.S. dollar retreats, stocks pare gains on Spanish debt
* U.S. retail sales above forecast, helping to lift stocks
By Herbert Lash
NEW YORK, April 16 Global equity markets pared
gains and government debt prices rose on Monday as worries about
Spain's fiscal problems and a resurgent euro zone crisis
overshadowed optimism generated by higher-than-expected U.S.
retail sales in March.
The dollar retreated against the euro while oil prices fell
after Spain acknowledged it has probably tipped into its second
recession since 2009.
Spanish 10-year government bond yields broke
through the 6 percent mark for the first time since early
December, raising concerns that the government's borrowing costs
could quickly reach unaffordable levels.
"The overall mood is one of risk aversion after the news
from Spain," said Eugen Weinberg, an energy analyst at
Commerzbank in Frankfurt.
"Credit default swap spreads are at record high levels and
Spanish banks are having trouble getting money in the markets
and are going to the European Central Bank instead. That is
weighing on sentiment."
Concern is growing that the recession will make it
impossible to meet deficit targets and that Spain will have to
seek some form of international bailout even as the Spanish
government says it is committed to making major budget cuts.
The cost of insuring Spanish debt against default hit a
record high at 522 basis points, meaning it costs $522,000 a
year to buy $10 million of protection, according to data from
German Bund futures rose to a new high of 140.56, up 20
ticks on the day, while 10-year German Bund yields
set a record low earlier in the session at 1.622 percent.
Stocks were supported by a report on U.S. retail sales for
March which came in higher than expected, suggesting economic
growth in the first quarter was not as weak as many had feared.
Total retail sales increased 0.8 percent after rising 1.0
percent in February, the Commerce Department said, as Americans
shrugged off high gasoline prices.
The sales gain surpassed economists' expectations for only a
0.3 percent rise and could prompt analysts to raise their
first-quarter growth forecasts of about 2.5 percent annually.
The Nasdaq fell sharply, weighed down by a 2.8 percent drop
in Apple Inc, but the Dow remained firmly in positive
territory and the broad S&P 500 index traded just below
The Dow Jones industrial average was up 70.61 points,
or 0.55 percent, at 12,920.20. The Standard & Poor's 500 Index
was down 0.24 points, or 0.02 percent, at 1,370.02. The
Nasdaq Composite Index was down 17.96 points, or 0.60
percent, at 2,993.37.
In Europe stocks pared gains, but were still higher. The
FTSE Eurofirst index of top European shares was up 0.7
points at 1,035.14.
The dollar was down against a basket of major
trading-partner currencies, with the U.S. Dollar Index
down 0.06 percent at 79.844.
The euro was down 0.03 percent at $1.3071, while
against the Japanese yen, the dollar was down 0.59
percent at 80.41 yen.
The benchmark 10-year U.S. Treasury note was up
9/32 in price to yield 1.96 percent.
Oil futures extended losses to more than 2 percent on news
that the Seaway crude oil pipeline's reversal would begin
earlier than expected if regulatory approval is secured,
sparking heavy transatlantic spread trading.
The further drop in futures added to a bearish mood in the
oil markets that had earlier felt pressure on euro zone worries
triggered by Spain's debt problems and weekend talks between
Iran and six world powers about its disputed nuclear program.
Brent crude for June delivery was down $2.65 at
$118.56 a barrel.
U.S. crude for May delivery which expires on Friday,
was down 76 cents at $102.07.