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GLOBAL MARKETS-Record bond sale draws strong demand; stocks gain
September 11, 2013 / 8:48 PM / in 4 years

GLOBAL MARKETS-Record bond sale draws strong demand; stocks gain

* Verizon sells $49 billion in bonds
    * Treasuries supported by Verizon deal as hedges lifted
    * S&P 500 index rises for seventh consecutive day
    * U.S. dollar falls near two-week low on Fed


    By Ellen Freilich
    NEW YORK, Sept 11 (Reuters) - Fixed-income investors gobbled
up $49 billion in notes sold by Verizon on Wednesday, the
largest-ever corporate bond sale in history, while global stocks
rose as tensions over a possible military strike on Syria eased,
and the dollar fell to a two-week low.
    The S&P 500 stock index rose for a seventh straight day.
    Verizon Communications Inc's $49 billion bond deal
drew a total of $101 billion in orders from pension funds,
endowments, institutional buyers and wealth managers hungry for
higher-yielding securities. 
    Many corporations and countries are rushing to sell debt as
they expect long-term interest rates to rise when the U.S.
Federal Reserve reduces its stimulus in coming months. The Fed
will hold a policy meeting next week. 
    Verizon sold the bonds partly to finance its $130 billion
buyout of its wireless operations, Verizon Wireless, from
Vodafone. 
    "Despite the specter of higher Treasury rates going forward,
investor demand remains for attractively priced corporate credit
deals," said Bonnie Baha, who heads global developed credit at
DoubleLine.
    As underwriters of the Verizon deal lifted hedges they had
put on to offset exposure to the Verizon offering, that
supported Treasuries prices.
    The Treasury's well-bid auction of re-opened 10-year notes
also drove up prices of U.S. government debt. 
    "Historically, reopenings have seen stronger demand than
refundings, a trend that proved relevant today," said William
O'Donnell, head Treasury strategist at RBS Securities in
Stamford, Connecticut. "The auction was on the stronger side."
    Benchmark 10-year notes rose in price 16/32. The
yield, which moves inversely to price, eased to 2.91 percent
from 2.97 percent on Tuesday and a two-year high of 3.01 percent
on Friday.
    
    SYRIAN CONCERNS REMAIN
    Major U.S stock indexes advanced as the concerns over Syria
eased, although jitters remained.
    President Barack Obama said a Russian offer to pressure
Syria to place its chemical weapons under international control
raised the chances of putting off a strike, though he voiced
skepticism about Russia's plan.
    Obama also asked Congressional leaders to delay a vote on to
authorize military force in order to allow diplomacy to play
out. 
    "The speech lessens some of the macro concerns out there,
and as the worst-case scenario around Syria becomes more
unlikely, investors are rotating back towards the market," said
Eric Teal, chief investment officer at First Citizens Bancshares
in Raleigh, North Carolina.
    Apple Inc's shares fell 5.4 percent one day after
it unveiled a high-end iPhone with a fingerprint scanner as well
as a cheaper model targeted at emerging markets.
    The decline in Apple hurt the Nasdaq Composite,
which dropped 4.01 points, or 0.11 percent, to 3,725.010. But
the Dow Jones industrial average, aided in part by a rise
in IBM shares, rose 135.54 points, or 0.89 percent, to
15,326.60. The S&P 500 gained 5.14 points, or 0.31
percent, to 1,689.13.
    Globally, MSCI's 45-country world index rose
0.46 percent. The FTSEurofirst 300 pan-European share
index rose 0.32 percent.
    Oil recovered some ground with Brent crude at
$111.64, above a 2 1/2-week trough of $110.59. The steadier
performance came after a 4 percent drop in the past two
sessions, the largest two-day fall since June.
    Gold edged up to $1,364.50 an ounce, after touching a
three-week low of $1,356.85.
    In Europe, Britain's unemployment rate dipped to its lowest
level since late 2012 in the latest sign its economy is picking
up. 
    Sterling rose to a seven-month high against both the dollar
 and the euro.
    Benchmark German government bonds tracked
minor gains by U.S. Treasuries.
    Italy's benchmark yields rose above Spain's for the first
time in 18 months amid concern about political instability and
about Italy's banks before an examination of all euro zone banks
by the European Central Bank in coming months. 
    
    DOLLAR NEAR TWO-WEEK LOWS
    Anticipation over the Federal Reserve's policy meeting next
week, on Sept. 17-18, kept trading in check, with currency and
the U.S. government debt markets awaiting whether the Fed will
begin to reduce its bond-buying program.
    The dollar fell near two-week lows against major currencies
as some traders pared bets on a reduction in stimulus by the
Fed.
    The yen rebounded against the dollar, though remained close
to a seven-week low struck earlier.
    The euro rose 0.36 percent to $1.3315. The dollar
fell 0.59 percent to 99.80 yen.
    The dollar index, a measure of the greenback versus six
major currencies, slipped 0.4 percent to 81.481, the
weakest since Aug. 29.

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