GLOBAL MARKETS-U.S. bonds, S&P 500 and Nasdaq rise, euro falls

* U.S. bonds recover from sharp sell-off earlier in the week
* S&P 500 ends at 2-year high, Nasdaq highest since Dec 2007
* Fitch downgrades Ireland, further pressuring the euro
(Updates with U.S. markets’ close, Nikkei futures)

By Walter Brandimarte

NEW YORK, Dec 9 (BestGrowthStock) – U.S. government bond prices
recovered on Thursday from a sharp sell-off earlier in the
week, supporting equity markets, but the euro fell (Read more about the trembling euro. ) after a
rating agency’s downgrade of Ireland revived concerns about
the euro-zone debt crisis.

Bargain-hunters bought Treasuries again after the 10-year
note’s yield reached a six-month high of 3.33 percent on
Wednesday. Strong demand in Thursday’s auction of 30-year
bonds also helped dismiss fears that investors had lost
confidence in U.S. government debt.

“A great, great auction to end the week and the recent
outperformance in 30-years was a strong hint that buyers
lurked,” said William O’Donnell, head of U.S. Treasury
strategy at RBS Securities Inc in New York.

Other strategists anticipate Treasuries will rally into
year-end. The benchmark 10-year note (US10YT=RR: ) rose 16/32 in
price, with the yield at 3.213 percent. The 30-year bond
(US30YT=RR: ) jumped almost 1 full point in price, taking its
yield down to 4.40 percent.

The vote of confidence in U.S. government debt took some
pressure off equity markets, but Asia still looked set for a
tepid start, with Japan’s Nikkei futures (NKZ0: ) traded in
Chicago falling 30 points to 10,250.

“The stock market has been looking at the rise in yields,”
said Burt White, managing director at LPL Financial in Boston.
“It was a little bit of a sigh that the auction went a little
better than anticipated and we’re not going to see a continued
surge in bond yields because that, over time, would end up
being a negative.”

Stocks got a lift from U.S. jobless claims, which fell
more than expected in the latest week. But resistance from
Democratic leaders to the extension of Bush-era tax cuts
weighed on the market. [ID:nN09222654]

The plan to extend tax cuts for two years, agreed to by
President Barack Obama and Republican leaders, will not be
taken up for a vote in the U.S. House of Representatives in
its current form, according to an aide for House Speaker Nancy
Pelosi. [ID:nWEN4224]

The S&P 500 and the Nasdaq ended higher, but the Dow
finished practically flat after major manufacturer DuPont
(DD.N: ) gave its outlook for 2011. DuPont’s shares slipped 1.1
percent to $48.32. [ID:nN09223105]

The Dow Jones industrial average (.DJI: ) dipped 2.42
points, or 0.02 percent, to end at 11,370.06.

But the Standard & Poor’s 500 Index (.SPX: ) rose 4.72
points, or 0.38 percent, to finish at 1,233.00, its highest
close since September 2008. The S&P rose above 1,228, a key
technical resistance level. The Nasdaq Composite Index (.IXIC: )
gained 7.51 points, or 0.29 percent, to 2,616.67, its highest
close since Dec. 31, 2007. This was the Nasdaq’s seventh
consecutive day of gains.

In Europe, the FTSEurofirst 300 (.FTEU3: ) index closed
higher for the fourth consecutive session. The pan-European
index rose 0.38 percent to 1,123.75 points after earlier
touching 1,127.67, its highest since September 2008.

“People are focusing on the growth prospects for next
year,” said Richard Jeffrey, chief investment officer at
Cazenove Capital Management.

MSCI’s All-Country World Index (.MIWD00000PUS: ) advanced
0.34 percent, while its emerging market index (.MSCIEF: ) edged
up 0.12 percent.

EURO-ZONE WORRIES

The euro fell (Read more about the trembling euro. ) after Ireland’s center-left opposition
Labour party said it will vote against an 85-billion-euro
IMF/EU bailout package when it is put before parliament for
approval next week.

“Word the Irish Labour Party will vote against the bailout
sent us down here to test the lows. Some longs are dumping
euros here,” said Brian Dolan, chief strategist at Forex.com
in Bedminster, New Jersey.

The European single currency was also hurt by Fitch’s
decision to slash Ireland’s credit rating by three notches to
BBB-plus. [ID:nLDE6B81AH]

The euro (EUR=: ) tumbled to session lows around $1.3169 and
then recouped some of that loss to $1.3233, down 0.17 percent
for the day.

The dollar was just slightly up against a basket of major
currencies, with the U.S. Dollar Index (.DXY: ) gaining 0.1
percent.

U.S. crude oil (CLc1: ) rose 9 cents, or 0.1 percent, to
settle at $88.37 a barrel, as the U.S. jobless claims data
fueled some optimism about the recovery of the world’s largest
economy.

Spot gold (XAU=: ) ended practically flat at $1,384.40 an
ounce, in the choppiest session of the past two weeks.
(Reporting and writing by Walter Brandimarte; Additional
reporting by Richard Leong, Leah Schnurr and Steven C.
Johnson; Editing by Jan Paschal)

GLOBAL MARKETS-U.S. bonds, S&P 500 and Nasdaq rise, euro falls