Euro tumbles but stocks rise in choppy day

By Herbert Lash

NEW YORK (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) broadly on Monday on fears of fresh credit rating downgrades in Europe but global stocks edged higher and a bond rally fizzled as hopes of future rallies in risky assets sparked choppy trading.

The euro slid beneath $1.31 after Moody’s Investors Service said it may cut the ratings on some Spanish banks, driving speculation that France and Belgium may be next in line after a multinotch downgrade of Ireland’s credit rating last week.

The euro hit record lows against the Australian dollar and the Swiss franc as traders fretted over Europe’s fiscal problems. The single currency fell below its 200-day moving average around $1.3102, usually a bearish sign.

“Credit ratings are eroding across much of the common currency zone as debt continues to increase and economic growth remains anemic,” said Karl Schamotta, senior market strategist at Western Union Business Solutions in Victoria, British Columbia.

The euro slid to a session low of $1.3096, according to Reuters data, and was last trading at about $1.3122.

U.S. stocks (Read more about the stock market today. ) drifted higher, lifted by energy and financial shares, and European stocks hit a 27-month closing high as investors rejiggered their portfolios in anticipation of the new year. The Morgan Stanley All Country World Index (.MIWD00000PUS: ) edged up 0.08 percent to 324.52.

“We have seen this year-end rally refuse to give up any ground,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Improving economic data, additional economic stimulus from the Federal Reserve and the extension of Bush-era tax cuts have combined to keep equities in demand, Hellwig said.

The benchmark Standard & Poor’s 500 Index is up 5.6 percent so far in December and up 11.8 percent year to date.

The Dow Jones industrial average (.DJI: ) shed 13.78 points, or 0.12 percent, to end at 11,478.13. But the Standard & Poor’s 500 Index (.SPX: ) gained 3.17 points, or 0.25 percent, to finish at 1,247.08. The Nasdaq Composite Index (.IXIC: ) added 6.59 points, or 0.25 percent, to close at 2,649.56.

Stocks in Tokyo were poised to open slightly higher, with the March futures contract that trades in Chicago for the Nikkei 225 up 10 points at 10,310.

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Commodity prices, including oil, rose broadly despite the stronger dollar, suggesting rising book-squaring activity before the year’s end and likely buying by investors who see sharper rallies in coming months.

Copper, wheat and crude oil all rose 1 percent or more, even as volumes across energy, metals and agricultural markets were about 40 percent lower than past 30-day average.

Oil investors shrugged off the stronger dollar and ongoing concerns about euro zone debt woes. A rally in gasoline futures ahead of expected holiday demand and cold weather supported heating oil futures.

The expiring U.S. January contract rose 79 cents to settle at $88.81 a barrel, while crude oil for February delivery rose 77 cents to settle at $89.37.

ICE Brent crude for February rose $1.07 to $92.74 a barrel.

Helping lift crude oil prices was news of a shut pipeline in Nigeria amid more militant activity and tensions on the Korean peninsula also lurked as a supportive factor.

Gold climbed as investors sought a safe haven after the European Central Bank issued a warning about the region’s finances and following news of Moody’s potential downgrade of some Spanish banks.

Spot gold rose $9.84 to $1,384.40 an ounce.

Prices of long-dated U.S. Treasury prices slipped, ending a two-day bounce, erasing earlier gains.

Selling emerged after the Federal Reserve bought Treasuries in two separate operations, both of them part of the Fed’s plan to keep interest rates low and spur the economic recovery.

The benchmark 10-year note dipped 1/32 in price, leaving its yield at 3.34 percent, while the 30-year bond slipped 5/32 in price to yield 4.44 percent.

The euro fell (Read more about the trembling euro. ) to 1.2678 Swiss francs on EBS trading platform, its weakest since the euro’s launch in 1999.

The U.S. Dollar Index (.DXY: ) gained 0.31 percent to 80.624.

Against the Japanese yen, the dollar was down 0.29 percent at 83.71.

(Reporting by Steven C. Johnson, Wanfeng Zhou, Barani Krishnan, Ellen Freilich and Robert Gibbons in New York; Writing by Herbert Lash; Editing by Jan Paschal)

Euro tumbles but stocks rise in choppy day