Reuters logo
GLOBAL MARKETS-Spain debt worries; stocks up on earnings
April 27, 2012 / 2:00 PM / in 5 years

GLOBAL MARKETS-Spain debt worries; stocks up on earnings

* Spain, Italy yields nudge higher after Spanish downgrade

* Italy calms nerves by selling almost 6 bln euros of bonds

* Lower-than-expected U.S. GDP leaves Fed easing door open

By Luciana Lopez

NEW YORK, April 27 (Reuters) - Spanish and Italian borrowing rates nudged higher on Friday after a two-notch downgrade of Spain’s sovereign credit rating, but equities rose as investors saw strong earnings outweighing worries about slowing growth in Europe and the United States.

U.S. stocks advanced in early trading, with Amazon the latest company to extend an earnings-driven rally that has erased most of April’s losses.

European shares gained as well, as Swedish machinery and tool maker Sandvik and France’s Vinci jumped after encouraging earnings figures.

“By and large, earnings season has been positive and has proven to be an offset to the euro debt situation and to the mixed economic numbers of late,” said Andre Bakhos, director of market analytics at Lek Securities in New York.

The Dow Jones industrial average gained 32.55 points, or 0.25 percent, to 13,237.17. The Standard & Poor’s 500 Index gained 3.52 points, or 0.25 percent, to 1,403.50. The Nasdaq Composite Index gained 6.34 points, or 0.21 percent, to 3,056.95.

The FTSEurofirst 300 index of top European shares climbed 0.76 percent.

But investors pushed Spain’s 10-year borrowing rate briefly above 6 percent, after Standard & Poor’s late on Thursday cut Spain’s credit rating to BBB plus on concern about the government’s exposure to its ailing banks.

Yields on the 10-year bond slipped backed later to around 5.914 percent. Italian yields were also slightly higher, but nerves eased as it sold 5.95 billion euros of new bonds without incident, even though at higher rates.

The euro edged higher, boosted by the Italian debt auction as well as the possibility of more easing from the U.S. Federal Reserve after U.S. growth data came in lower than expected.

First-quarter U.S. economic growth cooled as businesses cut back on investment and restocked shelves at a slower pace. Gross domestic product expanded at a 2.2 percent annual rate, below economists’ expectations for a 2.5 percent pace.

The data were “certainly a bit of a mixed picture,” said Camilla Sutton, chief currency strategist at Scotia Capital. “It does open the door for the Fed to remain dovish.”

Still, the euro has been a rangebound recently, trading largely within $1.3 to $1.34 for much of the year.

The single currency rose 0.33 percent to $1.3252 on Friday.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below