Wall St rises with euro, Catalan fears ease for now

NEW YORK (Reuters) - Stocks around the world rose on Tuesday as Wall Street eked out record highs ahead of earnings season, while U.S. Treasury prices pared gains after Catalonia’s leader allowed for talks with Madrid even as he proclaimed independence from Spain.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, October 2, 2017. REUTERS/Staff/Remote

Oil futures rose on signs of supply rebalancing, helping shares in energy companies. [O/R]

The dollar lost ground and the euro climbed to its highest in a week on strong data and monetary policy commentary as well as speculation on the Catalan situation.

The euro saw a small pullback when Catalan leader Carles Puigdemont proclaimed the region’s independence, but then hit a session high after he said its effects would be suspended to allow for talks with the Madrid government.

“Anything that shows Catalonia is open to talks would be well received by European assets,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

IBEX 35 Index futures were up 1.1 percent on Tuesday afternoon after Madrid’s IBEX stock index closed down 0.9 percent in the regular session.

The three major Wall Street indexes scaled new record highs, helped by gains in energy stocks and a 4.5 percent rise in shares of Wal-Mart on the back of the company’s $20 billion share buyback plan.

The Dow Jones Industrial Average rose 69.61 points, or 0.31 percent, to close at 22,830.68, the S&P 500 gained 5.91 points, or 0.23 percent, to 2,550.64 and the Nasdaq Composite added 7.52 points, or 0.11 percent, to 6,587.25.

MSCI’s gauge of stocks across the globe gained 0.44 percent.

“If you really want to be bearish about this market, there’s no shortage of macro events you could point to whether it’s North Korea or China, Catalonia or the Trump dynamics. So far the market has looked through every one of them,” said Nathan Thooft, senior managing director in asset allocation at Manulife Asset Management in Boston.

“It’s this game of looking at macro events versus actual fundamentals, and fundamentals are driving the market,” said Thooft, who expects earnings to beat expectations.

The dollar index, which tracks the greenback against a basket of major currencies, fell for the third day in a row. It fell 0.48 percent, with the euro up 0.66 percent to $1.1817.

On top of strong German export data, traders were also upbeat after one of the European Central Bank’s German policymakers called for an end to its stimulus.

The Catalan news also pared U.S. Treasuries gains.

Benchmark 10-year notes was last up 6/32 in price to yield 2.3481 percent, from 2.368 percent late on Monday.

The 30-year bond was last up 14/32 in price to yield 2.884 percent, from 2.906 percent late on Monday.

“They temporarily kicked the can (down the road) on Catalonia,” said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.

In commodities, Brent oil prices pushed higher supported by Saudi export cuts in November and comments from OPEC and trading companies that the market is rebalancing after years of oversupply.

U.S. crude settled up 2.7 percent while Brent settled 1.5 percent higher.

U.S. crude was last up 2.76 percent to $50.95 per barrel and Brent was last at $56.58, up 1.42 percent on the day.

Gold prices also hit their highest in more than a week against the backdrop of a weaker dollar although expectations for another U.S. interest rate hike capped gains. Spot gold added 0.3 percent to $1,287.70 an ounce.

Additional reporting by Richard Leong and Karen Brettell in New York, Marc Jones and Helen Reid in London, Lisa Twaronite in Tokyo; Editing by Nick Zieminski and James Dalgleish