December 27, 2012 / 3:30 PM / 5 years ago

GLOBAL MARKETS-World stocks, euro climb as U.S. budget talks eyed

* U.S. stocks open nearly flat; euro up 2nd day
    * European shares edge higher after return from holidays
    * Yen hits 2-year low as monetary easing eyed

    By Marc Jones and Caroline Valetkevitch
    LONDON/NEW YORK, Dec 27 (Reuters) - World stocks and the
euro edged higher on Thursday as U.S. lawmakers prepared to
resume negotiations to avoid a fiscal crunch, while the yen hit
a two-year low  on expectations a new government in Tokyo will
push for aggressive monetary stimulus.
    President Barack Obama will try to revive budget crisis
talks, which stalled last week, when he returns to Washington on
Thursday after cutting short his Christmas holiday in Hawaii.
    In a sign there may be a way to break the deadlock,
Republican House of Representatives Speaker John Boehner urged
the Democrat-controlled Senate to act to pull back from the
so-called "fiscal cliff" and offered to at least consider any
plan the upper chamber produced. 
    The MSCI global index was up 0.2 percent,
while U.S. stocks opened nearly flat. Japan's Nikkei had earlier
hit a 21-month high, amid signs the country's authorities are
preparing to ease policy considerably.
    On Wall Street, the Dow Jones industrial average was
down 6.01 points, or 0.05 percent, at 13,108.58. The Standard &
Poor's 500 Index was down 1.07 points, or 0.08 percent,
at 1,418.76. The Nasdaq Composite Index was down 1.55
points, or 0.05 percent, at 2,988.60.
     "As we've seen this year, the market really trades on the
last headline or the last sound bite that you get in spite of
fundamental indicators," said Keith Bliss, senior vice-president
at Cuttone & Co in New York. 
   "For this week, it's been all about when they are going to
have a conversation and what that conversation is going to be
    European shares were up 0.2 percent as trading
resumed after the Christmas holiday break. 
    Economists warn that the "fiscal cliff" of higher taxes and 
spending cuts, which are worth $600 billion and set to kick in
from January, could push the world's largest economy into
recession, dragging other countries with it.
    The dollar rose to 85.92 yen, its highest since
August 2010. It was last up 0.4 percent on the day at 85.91 yen
with option barriers cited at 86 yen and stop loss buy orders
above 86.10 yen. 
    Investors accelerated their yen sales after Prime Minister
Shinzo Abe said his newly formed government would pursue a bold
monetary policy, a flexible fiscal policy and a growth strategy
to encourage private investment.
    The yen has now fallen roughly 10.5 percent versus the
dollar in 2012, its biggest annual drop since 2005. At the same
time Japan's benchmark Nikkei is now up 22 percent for the year.
    "Yen weakness, based on expectations that the new Japanese
government will succeed in driving the dollar to 90 yen with a
combination of more aggressive monetary and fiscal policy, is
offering support to other currencies," said Marc Chandler,
global head of currency strategy at Brown Brothers Harriman in
New York.
     The euro, meanwhile, rose for a second straight session and
traded above $1.32 for eight consecutive days partly on position
adjustment going into the end of the year and a growing view
that euro zone debt tensions have eased.

    In commodity markets, London copper rose 1.7 percent
to a one-week high of $7,945.25 a tonne after some positive data
from China, the world's top copper buyer whose economy is now a
key driver of global growth.
    Profits earned by China's industrial companies jumped 22.8
percent in November from a year ago, accelerating from October's
20.5 percent, Beijing reported. "People are
hopeful that China's economy will recover next year," said Zhang
Ao, an analyst at Minmetals Futures.

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