GLOBAL MARKETS-Euro drops, silver surges on debt fears, Fed talk

* Euro drops as euro-zone finance ministers meet
* U.S. Treasury prices buoyed by Bernanke’s remarks
* Silver, gold, oil, commodities cling to gains
(Updates with Europe’s market close, commodities’ rise,
quote)

By Manuela Badawy

NEW YORK, Dec 6 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) sharply against
the dollar on Monday and silver hit a 30-year high as fears
remained about Europe’s sovereign debt problems amid
speculation the United States may extend monetary easing.

Investors rushed to buy U.S. silver futures, driving the
front-month contract above $30 an ounce for the first time
since 1980.

U.S. stocks (Read more about the stock market today. ) dipped as investors took profits while oil
eased after reaching a two-year high near $90 a barrel and
gold prices also approached their own record high.

U.S. Treasury prices rose, prompted by safe-haven bids
after Federal Reserve Chairman Ben Bernanke said on Sunday the
Fed may buy more than the $600 billion in U.S. government
bonds it has committed to purchase, if the economy failed to
respond. [ID:nN05271909]

“The U.S. showed you need to take extremely strong actions
to overcome the threat of a broad financial crisis,” said Rick
Meckler, president of investment firm LibertyView Capital
Management in New York.

“The feeling was Europe has only gone about two-thirds of
the way, and there was some hope they will go to a full-
throttle protection plan.”

Euro-zone finance ministers met on Monday amid pressure to
increase the size of a 750-billion-euro ($1,006 billion)
safety net for debt-stricken members in hopes of halting
potential contagion to other countries. For details, see
[ID:nLDE6B40EJ] Stocks and the euro have moved in tandem of
late with the euro looked at as a proxy for regional debt
concerns.

At midday in New York, the Dow Jones industrial average
(.DJI: ) inched down 5.79 points, or 0.05 percent, to 11,376.30.
The Standard & Poor’s 500 Index (.SPX: ) shed 1.49 points, or
0.12 percent, to 1,223.22. The Nasdaq Composite Index (.IXIC: )
dipped 0.91 of a point, or 0.04 percent, to 2,590.55.

The pan-European FTSEurofirst 300 index of European
shares (.FTEU3: ), added 0.13 percent to end at 1,105.41 as the
shares of of major oil companies got a lift from strong crude
prices, more than offsetting nerves over the outcome of the
euro-zone finance ministers’ meeting.

U.S. crude oil futures (CLc1: ) slipped 30 cents, or 0.34
percent, to $88.89 per barrel, after trading as high as
$89.76, the highest since October 2008, as a cold spell in
Europe and in parts of the United States spurred greater
heating demand.

The MSCI world equity index (.MIWD00000PUS: ) shed 0.17
percent to 321.58. Japan’s Nikkei (.N225: ) dipped 0.11 percent
to end at 10,167.23 on profit-taking after it hit a six-month
high last week.

EURO SLIDES, COMMODITIES SOAR

The euro (EUR=: ) slipped 0.95 percent to $1.3286, its first
decline in four sessions, as euro-zone finance ministers come
under pressure to increase the size of the region’s rescue
fund after an 85-billion-euro aid package for Ireland failed
to calm markets.

The dollar gained against a basket of currencies, with the
U.S. Dollar Index (.DXY: ) up 0.43 percent at 79.716. Against
the Japanese yen, the dollar (JPY=: ) was up just 0.08 percent
at 82.69 from a previous session close of 82.620.

Meanwhile, U.S. silver futures (SIH1: ) climbed above $30 an
ounce, gaining more than 2 percent as gold’s rally and strong
demand from momentum traders and retail investors lifted the
metal to its highest level since 1980.

“If you have money to put somewhere, you can either put it
in one of the smaller currencies like Canadian dollar or Swiss
franc or you can put it in an alternative currency like gold
or silver, and that’s what is happening here,” said Sterling
Smith, an analyst at Country Hedging Inc., in St. Paul,
Minnesota.

“I can see that continuing. Until I see real resolution to
the European debt crisis, money will find its way into
precious metals.”

Spot gold prices (XAU=: ) rose as high ast $1,420.31 an
ounce before easing to $1,413.40 an ounce later in the day. It
touched a record $1,424.10 early in November.

While strength in the U.S. currency kept a lid on
dollar-priced gold’s further gains, gold hit record highs in
euro and sterling terms, and Japanese yen-denominated bullion
hit its highest since early 1983 as risk aversion stoked
broad-based gains in the metal.

An International Monetary Fund report, to be delivered to
the meeting in Brussels, will say the euro zone should
increase the size of its 750-billion-euro rescue fund and the
European Central Bank should boost its bond buying markedly.

U.S. Treasury debt prices rose yet gains were limited as
investors prepared for this week’s $66 billion in
coupon-bearing supply. Traders have also been selling into
strength, either to lock in short-term profits or to unwind
earlier positions tied to the Fed’s latest quantitative easing
program, dubbed QE2.

The benchmark 10-year U.S. Treasury note (US10YT=RR: ) was
up 11/32, with the yield at 2.968 percent. The 2-year U.S.
Treasury note (US2YT=RR: ) was up 2/32, with the yield at 0.449
percent. The 30-year U.S. Treasury bond (US30YT=RR: ) was up
14/32, with the yield at 4.287 percent.
(Reporting and writing by Manuela Badawy; Additional
reporting by Leah Schnurr, Richard Leong and Julie Haviv in
New York, and Mike Peacock, Alex Lawler and Jan Harvey in
London; Editing by Jan Paschal)

GLOBAL MARKETS-Euro drops, silver surges on debt fears, Fed talk