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GLOBAL MARKETS-Euro falls on Irish ratings cut, stocks rise

Published 04/15/2011, 02:44 PM
Updated 04/15/2011, 02:48 PM
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* Stocks gains on tame US CPI, improved consumer sentiment

* Euro falls against US dollar after Moody's cuts Ireland

* U.S. Treasuries extend gains on benign inflation data

* Oil rises on China growth, better US consumer sentiment (Updates prices)

By Herbert Lash

NEW YORK, April 15 (Reuters) - The euro slid after Moody's cut Ireland's sovereign rating to just above junk on Friday, while global stocks rose as encouraging U.S. economic reports overshadowed disappointing corporate earnings.

Oil prices gained, with North Sea Brent crude climbing to $124 a barrel, after reports showed tame inflation and improved U.S. consumer sentiment this month, easing worries about slower growth. For details see [ID:nL3E7FF0HH]

The Moody's downgrade kept the euro zone's debt problems in focus, though the euro was underpinned by expectations of more rate rises by the European Central Bank and likelihood the Federal Reserve will keep U.S. rates on hold. [ID:nN15420019]

"The interest rate differential argument has clearly supported the euro the last few weeks," said Greg Salvaggio, senior vice president for capital markets at Tempus Consulting in Washington.

The dollar pared some gains after a report showed consumers grew more confident about the U.S. economy and even toned down their inflation expectations for the next five years, the Thomson Reuters/University of Michigan survey showed.

U.S. stocks rose in a broad advance and European stocks ended slightly higher but posted their first weekly loss in a month on worries over the euro zone debt crisis. [ID:nN15244744] [ID:nLDE73E1L1]

"I'm surprised the market is holding up so well, given Google and Bank of America. But everyone is happy with the consumer price number," said Randall Warren, chief investment officer of Warren Financial Service in Exton, Pennsylvania.

"People were afraid that inflation could derail the bull market, and this data puts that story on hold."

The Dow Jones industrial average <.DJI> was up 73.71 points, or 0.60 percent, at 12,358.86. The Standard & Poor's 500 Index <.SPX> was up 6.62 points, or 0.50 percent, at 1,321.14. The Nasdaq Composite Index <.IXIC> was up 2.34 points, or 0.08 percent, at 2,762.56.

Poor corporate results tempered gains. Bank of America reported a steeper-than-expected decline in profits, and Google late Thursday unnerved investors with a large jump in first-quarter spending. [ID:nN15213078] [ID:nL3E7FF1CC]

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.3 percent higher at 1,131.72 points. For the week, posted a 1.5 percent loss.

Global stocks as measured by MSCI's all-country world index <.MIWD00000PUS> rose 0.2 percent, pulled higher by Wall Street.

Oil rose, lifted by U.S. consumer sentiment and Chinese economic growth data that outweighed concerns about the strain of rising fuel costs on the economy. [ID:nL3E7FF0HH]

ICE Brent crude for June delivery rose $1.48 at $123.48 a barrel after hitting an intraday high of $124.02.

U.S. crude futures for May rose to $109.61 a barrel, up $1.50.

U.S. Treasuries extended gains on the government report showing underlying inflation pressures were subdued in March. [ID:nN15306631]

The benchmark 10-year U.S. Treasury note was up 22/32 in price to yield 3.41 percent.

Analysts and traders are turning increasingly bullish on the near term outlook for U.S. Treasuries, saying slowing growth and benign inflation may help further price gains. [ID:nN15235704]

Spot gold prices rose $13.30 to $1,486.20 an ounce.

Copper closed almost flat as the dollar pared gains, but investors worried high inflation in China would lead to monetary tightening and erode demand. [ID:nLDE73E0MY]

"The pace of Chinese growth points to further monetary tightening there, which could weigh on Chinese fuel demand in the future," said Carsten Fritsch, an analyst at Commerzbank. (Reporting by Ryan Vlastelica, Nick Olivari and Ellen Freilich in New York; Christopher Johnson, Rebekah Curtis and Kirsten Donovan in London; Blaise Robinson in Paris; Writing by Herbert Lash; Editing by Kenneth Barry)

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