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GLOBAL MARKETS-Spanish bond demand helps euro shrug off German data dip
May 14, 2013 / 7:51 AM / in 4 years

GLOBAL MARKETS-Spanish bond demand helps euro shrug off German data dip

* Dollar index down as euro, yen edge higher
    * Commodities pause from selling, gold recoups previous
day's loss
    * European shares dip; ZEW, euro zone industrial output data

    By Marc Jones
    LONDON, May 14 (Reuters) - A pause in the dollar's recent
run helped steady oil and gold prices on Tuesday, while large
demand for Spanish bonds helped the euro shake off
weaker-than-forecast German sentiment data.
    After a surprising rise in U.S. retail sales boosted
optimism about the recovery in the world's top economy on
Monday, Germany's ZEW monthly sentiment survey underscored the
uncertainty that continues to weigh on Europe.
    The monthly poll of economic sentiment rose to 36.4 points
from 36.3 in April, undershooting the consensus forecast in a
Reuters poll of 30 economists of 38.3, with the institute
blaming the miss on the euro zone's ongoing woes. 
   "Despite mostly positive economic data for the German
economy, the ZEW indicator remains at the level of the previous
month," said ZEW President Clemens Fuest. "This may be due to
the still poor economic situation in the euro zone, that is also
reflected by the recent ECB interest rate cut."
    The euro had been hovering at $1.30 ahead of the data
after some profit taking on a dollar at five-week high
against a basket of major currencies. The ZEW numbers saw it
drop to $1.2983 but it quickly recovered after Spain saw huge
demand for 10-year bonds it plans to offer.   
    Monday's better-than-forecast U.S. retail sales had prompted
Goldman Sachs and JPMorgan to upgrade their view on
second-quarter U.S. growth. More data will be released this
week, including industrial production, housing starts and
consumer sentiment. 
    Economists are beginning to shake off fears of a damaging
U.S. spring slowdown and the pick up has stirred market talk
that the Federal Reserve could scale back its aggressive
bond-buying programme aimed at supporting growth later this
    Euro zone industrial production data for March was slightly
above forecast, indicating the bloc remains in a mild recession.
First quarter GDP figures are due on Wednesday for the overall
euro zone as well as Germany, France, Italy, the Netherlands,
Austria, Portugal and Greece.
    World stocks are at their highest level in almost five years
following a four-year rally built on a constant drip feed of
central bank support.
    Dan Morris, a macro strategist at JP Morgan, said the recent
rise in the dollar was not just due to weakening of currencies
like the yen but also proof investors were becoming increasingly
confident about U.S. growth.
     "It is indicator that the U.S. is doing better so that
should generally be a positive signal for equities."    
    European stock markets started the day brightly but the
momentum faded quickly and the pan-regional FTSEurofirst 300
 extended losses to 0.4 percent after the ZEW data.
    London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were down 0.1, 0.4 and 0.2 percent
respectively, while MSCI's world share index was flat.
    The drop back in the dollar allowed gold to find a
firmer footing after three days of falls and helped oil to
steady at just below $103 a barrel.  
    In the Europe's bond markets, the benchmark German Bund
 stayed well inside its tight recent range, while yields
on Italian and Spanish bonds edged
up again leaving them at their highest in two weeks despite the
well-received Spain sale.

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