The euro climbed against the dollar on Thursday in volatile trading, snapping two days of losses, with the single currency boosted by institutional buying to adjust short positions following generally solid Spanish bond auctions this week.
News that the International Monetary Fund has secured commitments of about $320 billion in funding to help shield member economies from the debt crisis in Europe gave the euro.additional support, some analysts said. Analysts also talked of large repatriations of euros by European banks to increase capital, which also bolstered the currency.
Spain has ordered its battered banking sector to reinforce balance sheets as a correction in the housing market continues and the central bank forecasts lenders will need some 53.8 billion euros ($70.7 billion) to cushion against bad debt. But some doubt that amount will be enough. There is still a lot of skepticism in the market about the liquidity in the euro zone financial system and the sustainability of the region's debt. On the other hand, some institutional investors are less pessimistic and are willing to get out of their short positions and stay neutral.
In late afternoon New York trading, the euro <EUR=> rose 0.1 percent to $1.3131 after earlier hitting a session low of $1.3068 with the session peak at $1.3164. Against the yen, the euro climbed 0.4 percent to 107.07 yen <EURJPY=>.
Weak data sends Wall St tumbling
U.S. stocks fell for a second straight day on Thursday as investors were discouraged by economic data and focused on negative corporate news. Concerns over European finances also clouded the outlook, as Spanish government bond yields rose after a disappointing debt auction and French yields rose on rumors, later denied, that the country's credit rating may be downgraded.
Apple <AAPL.O> shares, down more than 3 percent, also weighed on the market. Qualcomm Inc <QCOM.O> led technology stocks lower a day after it warned of trouble meeting demand for some of its chips, while Stanley Black & Decker <SWK.N> fell 7 percent to lead declines among industrials, the second-worst performing of the top 10 S&P 500 sectors.
The big declines came amid a strong beginning to earnings season, confirmed Thursday by better-than-expected reports from Bank of America Corp <BAC.N>, Morgan Stanley <MS.N>, and eBay Inc <EBAY.O>. Raising concerns about the economic outlook, new weekly U.S. claims for unemployment benefits were above expectations, factory activity in the Mid-Atlantic region slowed sharply and home resales dropped in March for a second straight month.
The Dow Jones industrial average <.DJI> fell 115.57 points, or 0.89 percent, to 12,917.18. The S&P 500 Index <.SPX> dropped 11.72 points, or 0.85 percent, to 1,373.42. The Nasdaq Composite <.IXIC> lost 29.87 points, or 0.99 percent, to 3,001.58.
Gold falls for fifth day, silver demand seen higher
Gold eased on Thursday as European debt jitters and worries over the U.S. job market extended the metal's losses for a fifth consecutive day. Silver prices ended higher, as the head of metals research firm Thomson Reuters GFMS said silver sales for industrial applications, as well as for jewelry, coins, silverware and photography, should climb 3 to 5 percent this year.
Bullion, which has tended to follow riskier assets, reversed earlier gains as Wall Street fell on market talk about a possible downgrade of France's top-notch debt rating later this year and disappointing U.S. jobless claims data. Gold has lost around $150 an ounce since late February after a strong run of U.S. economic data dashed hopes of further U.S. monetary easing. A recent drop of volume also reflects waning investor interest in the gold trade.
Spot gold <XAU=> was down 0.2 percent at $1,638.80 an ounce by 2:11 p.m. EDT (1811 GMT), having traded as high as $1,654.90 an ounce. Gold has dropped around 2 percent during its five-day decline, its longest losing streak since January 2011.
U.S. gold futures <GCM2> for June delivery settled up $1.80 an ounce at $1,641.40. The discrepancy between spot and future prices was due to a lower U.S. gold close on Wednesday. Gold traders will now turn their attention to a Federal Reserve policy meeting next week, after the end of a nervous Spanish government debt auction pressured gold and other assets.
Oil Declines as U.S. Jobless Claims, Home Sales Miss Esti
Oil declined in New York as more Americans than forecast filed applications for unemployment benefits and sales of previously owned homes fell, adding to concern that the U.S. recovery is stalling. Futures dropped 0.4 percent after the Labor Department said jobless claims decreased by 2,000 to 386,000 last week. The median forecast of 47 economists surveyed by Bloomberg called for 370,000. Purchases fell 2.6 percent to a 4.48 million annual rate from 4.6 million in February, the National Association of Realtors reported in Washington.
The jobless claims combined with the housing numbers are evidence that the economy is still struggling a bit, said Phil Flynn, vice president of research at futures brokerage PFGBest in Chicago. “The economy is growing but very uneven.
Crude oil for May delivery declined 40 cents to $102.27 a barrel on the New York Mercantile Exchange, the lowest settlement since April 10. Prices are down 5.4 percent from a year ago. Brent oil for June settlement increased 3 cents to end the session at $118 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark contract’s front-month premium to New York-traded West Texas Intermediate for June delivery widened for a second day, reaching $15.28. The spread narrowed to $14.14 on April 17 based on settlement prices, the lowest level since Feb. 1.
Nikkei seen range-bound, risk-appetite clipped by euro fears
Japan's Nikkei share average is set to tread in a range on Friday after a Spanish bond auction failed to extinguish fears of a rerun of the euro zone debt crisis and as U.S. jobs data disappointed. Market players said the Nikkei was likely to trade between 9,500 and 9,600 on thin volume, with investors remaining cautious ahead of an April 27 Bank of Japan meeting that will weigh up the need for further easing measures.
Nikkei futures in Chicago <0#NIY:> closed at 9,560, down 40 points, or 0.4 percent from the close in Osaka <JNIc1> of 9,600.
Spain issued 2.5 billion euros ($3.3 billion) in 2- and 10-year bonds on Thursday, at the top end of the targeted amount and on solid demand, but yields still rose above paper issued in a January auction. The concern that the country could be unable to finance its own debt and worsen the euro zone debt crisis has recently spooked investors.
U.S. stocks fell overnight following poor jobs data and disappointing earning results from several companies, including Qualcomm Inc <QCOM.0> and Stanley Black & Decker <SWK.N>. Microsoft Corp's <MSFT.0> profit report beat forecasts and pushed the stock 2.7 percent higher in extended-hours trading. The yen has eased over the past three days, with the dollar creeping up to 81.68 yen, nudging major exporters such as Toyota <7203.T> to outperform the index. Strategists said the currency would be unlikely to weaken significantly before the BOJ meeting on April 27, when the central bank is widely expected to announce further monetary easing.
Seoul shares poised for fall; POSCO, KAI eyed
Seoul shares are poised for a weak start on Friday after U.S. stocks fell for a second day overnight, hit by weak labour market data and dismal corporate results, and as a debt sale by Spain failed to soothe worries about the country's finances.
Raising concerns about the economic outlook, new U.S. claims for unemployment benefits declined only slightly last week and were well above economists' expectations. Other reports pointed to slowing factory activity and depressed home sales.
Spain sold all the bonds it wanted at an auction on Thursday, but with rising yields, indicating growing concerns the government will not be able to ame its deficit. The Korea Composite Stock Price Index (KOSPI) <.KS11> edged down 0.23 percent on Thursday, closing just below the psychologically significant 2,000 point level. The world's No.3 steelmaker POSCO <005490.KS> will be eyed ahead of its first quarter results, to be reported later in the day.
Source : Reuters
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