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GLOBAL MARKETS-Wall Street muted by health stocks; Italy, ECB boost Europe
December 7, 2016 / 4:05 PM / a year ago

GLOBAL MARKETS-Wall Street muted by health stocks; Italy, ECB boost Europe

* U.S. stocks rise, U.S Treasury prices rise

* Banks lead European shares higher, Wall St seen lower

* Euro edges up vs dollar before ECB meeting

* Aussie dollar falls, stocks rise, after GDP drop

* Oil dips on doubts over impact of OPEC deal (Updates after U.S. open, changes byline, previous dateline LONDON)

By Sinead Carew

NEW YORK, Dec 7 (Reuters) - Wall Street’s rise was held back by health stocks on Wednesday while European stocks rose on reports Italy would step in to rescue troubled bank Monte dei Paschi and on expectations the European Central Bank would extend its bond-buying.

Major currencies treaded water with traders waiting on the ECB’s Thursday meeting to find out if the ECB’s monthly bond purchases will be kept steady or scaled back, and whether it will signal the eventual end of the program.

Prices on longer-dated U.S. Treasuries rose following a large block purchase of 10-year Treasury note futures after disappointing overseas data pushed foreign yields lower.

Healthcare stocks were the biggest drag on the S&P 500 after a report that President Elect Donald Trump said he would bring down pricing. This led the benchmark S&P to take a breather after three days of advances.

“When we have run up so high, it’s common that there is some sensitivity in the market, maybe due to softer oil prices or just the technical aspects of being at such high levels,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

The Dow Jones industrial average was up 15.43 points, or 0.08 percent, to 19,267.21, the S&P 500 gained 2.28 points, or 0.1 percent, to 2,214.51 and the Nasdaq Composite had dropped 1.39 points, or 0.03 percent, to 5,331.61.

Oil prices fell as investors questioned whether a deal to cut output agreed last week by the Organization of the Petroleum Exporting Countries (OPEC) and others would be enough to drain a global glut.

Brent crude, the international benchmark, fell 75 cents to $53.19 a barrel. U.S. light crude was down 94 cents at $49.99 a barrel.


The pan-European STOXX 600 index rose 0.7 percent while Italy’s FTSE MIB share index gained 1.7 percent, to hit its highest point since May as the country’s banking stocks continued their rally.

Shares in Monte dei Paschi, Italy’s oldest bank, rose about 9 percent, and an index of Italian lenders’ shares rose 5 percent after jumping 9 percent in the previous day’s session.

Reuters had reported exclusively on Tuesday that Italy was preparing to take a 2-billion-euro controlling stake in the bank as prospects of a private funding rescue faded following Prime Minister Matteo Renzi’s decision to resign after voters rejected his proposals for constitutional reform.

“Despite the fact that the probability of early elections has risen, the market is focusing on the banking sector and the fact the government seems to be showing more urgency in dealing with that problem,” Mizuho strategist Antoine Bouvet said.

The euro edged up 0.3 percent to $1.075. The dollar index, which measures the U.S. currency against a basket of six of its major peers, was down 0.2 percent.

Benchmark 10-year Treasury notes US10YT=RR were up 12/32 in price to yield 2.351 percent, down 4.5 basis points from late on Tuesday. The 10-year yield retreated further from a near 1-1/2 year peak struck on Dec. 1 at 2.492 percent, according to Reuters data.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent while Japan’s Nikkei added 0.7 percent. Chinese shares gained 0.5 percent.

Additional reporting by Yashaswini Swamynathan in Bengaluru; Nigel Stephenson in London, Hideyuki Sano in Tokyo and John Geddie, Jemima Kelly, Christopher Johnson in London; Editing by Nick Zieminski

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