Global stocks up, Treasuries down as debt fears linger

By Walter Brandimarte

NEW YORK (BestGrowthStock) – Wall Street opened higher on Thursday, supported by positive jobs data and corporate earnings, but lingering fears about sovereign debt weighed on U.S. Treasuries and the euro, which stayed near 10-month lows.

A decision by the European Central Bank to extend the timeframe for easier rules on collateral beyond 2010 will likely benefit Greece, easing some of the tension that had battered stocks and sent the euro to its weakest since early May 2009.

Still, investors remained highly concerned about the stability of the euro zone because of Greece’s financial troubles and Wednesday’s downgrade of Portugal’s credit ratings.

Diplomatic efforts continued ahead of a European Union summit that will discuss whether Greece should be receive EU financial support or turn to the International Monetary Fund.

“It’s negative for the euro if the euro zone cannot solve the problem on its own,” said Matthew Strauss, a senior currency strategist at RBC Capital Markets in Toronto.

“Turning to the IMF could complicate the situation because IMF assistance comes with a number of strict conditions, both on the fiscal and monetary sides,” he added.

The euro zone’s single currency was up 0.14 percent at $1.3332, after dropping earlier to $1.3285, its lowest since May 2009.

In the United States, a massive supply of new government debt weighed on the Treasury bond market.

Wall Street opened higher, however, after data showed the number of U.S. workers filing new applications for unemployment insurance fell sharply last week. The number of those continuing to receive benefits after an initial week of aid fell to the lowest point since December 2008.

The Dow Jones industrial average (.DJI: ) was up 67.26 points, or 0.62 percent, at 10,903.41, while the Standard & Poor’s 500 Index (.SPX: ) gained 7.13 points, or 0.61 percent, to 1,174.85. The Nasdaq Composite Index (.IXIC: ) rose 19.00 points, or 0.79 percent, to 2,417.76.

Shares of Best Buy (BBY.N: ) jumped nearly 8 percent after the company announced earnings that beat expectations and issued an upbeat forecast.

In Europe, the FTSEurofirst 300 (.FTEU3: ) index of top shares climbed 0.91 percent, boosted by financial stocks. Earlier in the session, the index reached its highest level since October 2008.

Against the Japanese yen, the dollar was up 0.26 percent at 92.45, near a 10-week high. The pair broke above its 200-day moving average at around 91.55 yen, signaling further gains.

TREASURIES UNDER PRESSURE

U.S. Treasuries prices added to Wednesday’s losses, sending 10-year yields to a 2-1/2 month high, as investors grew nervous ahead of an auction of seven-year notes scheduled for later in the day.

The benchmark 10-year U.S. Treasury note lost 1/32 in price, with the yield at 3.8544 percent. The 30-year U.S. Treasury bond was down 5/32, with the yield at 4.7367 percent.

On Wednesday a $42 billion auction of five-year U.S. Treasury notes drew poor investor demand, increasing concerns about the auction of $32 billion in seven-year notes scheduled for 1 p.m.

“We would expect the seven-year auction to not be as bad as the five-year yesterday although we would still expect a weak auction,” said Suvrat Prakash, U.S. interest rate strategist with BNP Paribas in New York.

U.S. crude prices were higher, though, supported by the positive jobs data.

The May crude contract rose 41 cents, or 0.51 percent, to $81.02 per barrel. Spot gold prices rose $3.05, or 0.28 percent, to $1,090.00.

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(Editing by Chizu Nomiyama)

Global stocks up, Treasuries down as debt fears linger