November 28, 2012 / 8:07 PM / 5 years ago

GLOBAL MARKETS-Stocks recover, euro pares loss on Boehner words

* Investors focus on U.S. fiscal risks, Greek uncertainty
    * Euro down, trepidation on Greek deal remains

    NEW YORK, Nov 28 (Reuters) - U.S. and European stocks
rebounded to post gains while the euro pared losses on Wednesday
as investors shifted into buying mode after perceived positive
news on U.S. budget talks.
    U.S. House Speaker John Boehner, an a Ohio Republican, said
he is willing to put revenues on the table if accompanied by
spending cuts. But he repeated his opposition to raising income
tax rates. 
    Boehner's comments came as U.S. indexes were marking session
lows and produced a sharp turnaround that reverberated through
other markets. 
    Investors remained skeptical over the plan agreed to late
Monday by international lenders to reduce Greece's debts, but
they were more focused on the positive news. The Greek deal
opened the way for more aid to Athens to avoid a chaotic
default, but details remain unclear and analysts worry it will
not do enough to make Greece's debt viable.
    Riskier sovereign debt of Italy and Spain bounced sharply in
price, in part due to hedge funds taking profits on previous
short positions following the Greece deal. 
    U.S. stock markets have been a prisoner of the shifting
winds in Washington in recent weeks. The equity market has been
under pressure following the re-election of President Barack
Obama due to concerns about the impact on the economy of the
planned package of tax increases and spending cuts known as the
"fiscal cliff" due to take effect in January.  
    "There's only one issue in front of the financial markets,
and it's the debate on the 'fiscal cliff,'" said Jack De Gan,
chief investment officer of Harbor Advisory Corp in Portsmouth,
New Hampshire. "That's the only issue out there, and I think in
the short term, there's not much that we can do other than
watch, and try to anticipate what's going to happen."
    On Tuesday, stocks declined after U.S. Senate Majority
Leader Harry Reid, a Nevada Democrat, expressed disappointment
over the progress of the talks between Democrats and
    But Obama said on Wednesday he hopes he and Congress can
reach an agreement to shrink the budget deficit before Christmas
and urged supporters to press lawmakers to agree to a deal.
    "Anything that points to a deal happening is going to be
good for the market right now. Anything that points to a deal
falling apart is going to be bad for a market. We are becoming
myopically focused on this one issue, and I think that continues
for a while longer," said Stephen Massocca, managing director at
Wedbush Morgan in San Francisco. 
    The Dow Jones industrial average was up 77.91 points,
or 0.60 percent, at 12,956.04. The Standard & Poor's 500 Index 
 was up 6.07 points, or 0.43 percent, at 1,405.01. The
Nasdaq Composite Index  was up 12.60 points, or 0.42
percent, at 2,980.39. 
    The MSCI index of global stocks was up 0.1
percent. The FTSEurofirst300 index of European stocks
was up 0.2 percent.
    In currency markets, the euro was down 0.1 percent to
$1.2931 as some traders bet recent gains made in the run up to
the Greek deal were too far, too fast. 
    "The uncertainty brought by this (Greek deal) approach makes
European assets, including the euro, vulnerable to global growth
risks," Barclays Capital analysts said in a note. "For that
reason we think the European muddle through amplifies the
market's response to the fiscal cliff discussion in the U.S." 
    Ten-year Italian government bond yields fell to their lowest
since February 2011, however, and Spain's
benchmark 10-year note went to its lowest in a month
    The benchmark 10-year U.S. Treasury note was up
7/32, with the yield at 1.6147 percent.
    In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan fell 0.3 percent. 
    Commodity markets remained focused on the negative news and
how a possible U.S. budget crisis could tip the world's biggest
economy into recession.
    Gold fell for a third straight day, copper 
dropped from a three-week high and Brent crude fell to
around $109 per barrel.   
    U.S. crude oil futures fell 0.9 percent to $86.43.
    "There is bearish sentiment caused by problems in U.S.
negotiations, with the 'fiscal cliff' still looming," said Filip
Petersson, analyst at SEB in Stockholm.
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