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GLOBAL MARKETS-Euro falls broadly, crude slips on strong dollar

Published 04/15/2010, 10:55 AM
Updated 04/15/2010, 11:08 AM
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* Global stocks continue rally even on mixed U.S. data

* Euro falls sharply on persistent Greece debt concerns

* Oil holds near $86, dollar tempers high China growth

* U.S. bond prices slip after regional U.S. factory data

By Herbert Lash and Jeremy Gaunt

NEW YORK/LONDON, April 15 (Reuters) - The euro fell broadly on Thursday as concerns about Greece's debt woes resurfaced while strength in the U.S. dollar kept a lid on commodity prices and global stocks edged higher.

Further signs of economic expansion underpinned equity markets, but 11.9 percent growth in China renewed calls for tighter policies to prevent its economy from overheating, sending copper prices lower.

Surging growth in Chinese gross domestic product, at the fastest pace since 2007, buoyed oil prices earlier but the stronger dollar tempered the rally and crude hovered below $86 a barrel. For details see: [ID:nSGE63E05E]

The euro was on track for its biggest one-day fall in three weeks against the dollar as the spread between Greek and German government bond yields widened to near record levels hit before euro zone members agreed on a standby aid package for Greece. [ID:nN15212956]

The euro was down 0.70 percent at $1.3555.

The 10-year Greek-German government bond yield spread widened to as much as 435 basis points, the most since last Thursday.

"Markets are not pacified by the bailout package agreed upon last weekend and still consider Greece to be a high default risk," said Boris Schlossberg, director of currency research at GFT in New York.

Mixed U.S. economic data initially put a damper on Wall Street but the prospects for a strong corporate earnings season kept in place 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 Wall Street resumed its move higher.

In Europe, drugmakers rose after sales at Roche beat forecasts, helping lift regional indexes.

"The underpinning for our move higher is in place -- meaning earnings season has begun, it has been solidly positive, with expectations being met and beat and guidance higher," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

"With that as the backdrop, the headwinds we face are Greece, fear of over-extension on the run up and this ongoing sense that we have to pull back."

The Dow Jones industrial average <.DJI> was up 5.74 points, or 0.05 percent, at 11,128.85. The Standard & Poor's 500 Index <.SPX> was up 1.64 points, or 0.14 percent, at 1,212.29. The Nasdaq Composite Index <.IXIC> was up 9.80 points, or 0.39 percent, at 2,514.66.

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. [ID:nN15325702][ID:nN15226659]

However, the number of U.S. workers filing new claims for jobless aid soared last week as a backlog from the Easter holiday was processed, adding to worries about the recovery, while U.S. industrial output rose less than expected in March. [ID:nN15325702]

Longer-dated U.S. Treasury debt prices were slightly lower after the jumps in regional manufacturing undermined the safe-haven appeal of government debt. [ID:nN15333499]

The benchmark 10-year U.S. Treasury note was down 2/32 in price to yield 3.8729 percent.

U.S. light sweet crude oil fell 5 cents, or 0.06 percent, to $85.79 a barrel as the dollar firmed.

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

Spot gold prices rose $1.15 to $1,155.00 an ounce.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.50 percent at 80.589.

Against the yen, the dollar was up 0.23 percent at 93.41. (Reporting by Chuck Mikolajczak, Chris Reese, Wanfeng Zhou in New York; Brian Gorman, Emma Farge and Kirsten Donovan in London; writing by Herbert Lash, Editing by Chizu Nomiyama)

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