Euro falls on Greek debt fears, stocks rise

By Herbert Lash

NEW YORK (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) broadly on Thursday as worries about Greece’s debt woes resurfaced while strength in the U.S. dollar kept a lid on commodity prices and global stocks edged higher on solid corporate earnings.

Late in the day Greece asked for official talks with European authorities and the International Monetary Fund, a step that could lead to the release of billions of euros from a standby aid package agreed on over this past weekend.

The yield spread of 10-year Greek government bonds against German Bunds closed slightly wider at 413 basis points, but was much tighter than the session’s 436 basis point high.

The euro was on track for its biggest one-day fall against the dollar in three weeks, down 0.78 percent at $1.3545.

“The biggest concern for the market is the Greeks don’t realize how difficult it is to fund in the market and they don’t have any Plan B,” said Gianluca Salford, a strategist at JPMorgan. “Anything that suggests there is a Plan B is welcomed.”

Further signs of economic expansion helped underpin equity markets, including an annual growth rate in China of 11.9 percent, the fastest pace of growth since 2007. But China’s unexpectedly strong growth rate renewed calls for tighter policies to prevent an overheated economy and stoked speculation of when Beijing will allow the yuan to ease.

China’s growth buoyed oil prices early but the stronger dollar tempered the rally and crude hovered below $86 a barrel.

Mixed U.S. economic data kept Wall Street indexes little changed, though the prospects for a strong corporate earnings season have helped kindle an equity market rally that has pushed stock prices to highs last seen in the fall of 2008.

The MSCI index of global stocks (.MIWD00000PUS: ) rose to an 18-month high, and a pan-European index of regional shares closed at its highest level since September 2008.

“Earnings season has had a good start, and this is supporting equity markets,” said Tammo Greetfeld, equity strategist at UniCredit in Munich.

In Europe Roche (ROG.VX: ) results beat forecasts, lifting drug makers, and bank stocks added to Wednesday’s gains.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares closed up 0.6 percent at 1,112.22 points.

Wall Street traded mostly flat.

The Dow Jones industrial average (.DJI: ) was down 9.15 points, or 0.08 percent, at 11,113.96. The Standard & Poor’s 500 Index (.SPX: ) was down 1.37 points, or 0.11 percent, at 1,209.28. The Nasdaq Composite Index (.IXIC: ) was up 4.17 points, or 0.17 percent, at 2,509.03.

An upbeat profit forecast from United Parcel Service (UPS.N: ), the largest U.S. package delivery company, pushed up transportation shares and helped offset concern about a rise in weekly U.S. jobless claims.

The number of U.S. workers filing new claims for jobless aid soared last week as a backlog from the Easter holiday was processed, while U.S. industrial output rose less than expected in March.

But a gauge of manufacturing in New York state rose to a six-month high in April and factory activity in the mid-Atlantic region that month was at its highest level since December, according to reports from regional Federal Reserve banks.

U.S. Treasury debt prices rose.

The benchmark 10-year U.S. Treasury note was up 7/32 in price to yield 3.84 percent.

U.S. light sweet crude oil fell 25 cents to $85.59 a barrel.

Spot gold prices rose $5.55 to $1,159.40 an ounce.

Oil tends to fall as the dollar rises as it makes commodities more expensive for buyers using other currencies.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) up 0.51 percent at 80.602.

Against the yen, the dollar was up 0.12 percent at 93.09.

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(Reporting by Caroline Valetkevitch, Chris Reese, Wanfeng Zhou in New York; Joanne Frearson, Emma Farge, William James and Jan Harvey in London; writing by Herbert Lash; Editing by Leslie Adler)

Euro falls on Greek debt fears, stocks rise