GLOBAL MARKETS-Encouraging data stabilize stocks, euro

NEW YORK (Dec 15): Wall Street stocks and the euro snapped their
three-day losing streaks on Thursday as encouraging U.S. economic data
and a solid Spanish debt auction reduced fears that the euro zone debt
crisis could spark a global recession.

U.S. first-time claims for jobless benefits fell to a 3-1/2-year low
in the latest week, raising expectations that the weak labor market,
which has bogged down U.S. economic growth, might be gaining traction.
Signs of strength in the manufacturing sector also boosted investors'
risk appetite.

There was also a sign of improvement in the European economy. A
private gauge of euro zone manufacturing unexpectedly rose in December,
although it remained at a level indicating a fourth straight month of
contraction.

"Can the U.S. go it totally alone? No. But the rest of the world,
with the exception of Europe, we are pretty positive about. We don't
think it's going to fall apart," said Tim Ghriskey, chief investment
officer of Solaris Asset Management in Bedford Hills, New York.

The absence, however, of a comprehensive plan from European leaders
to contain the debt crisis continued to keep investors on the defensive.
A rebound in oil, gold and commodities prices fizzled, a day after a
steep sell-off, while U.S. and German government debt continued to
attract safe-haven bids.

The typical drop-off in trading volume at year-end has compounded an unpredictable and risk-averse climate.

"The risks are tremendous and the politics are fickle," said Milton
Ezrati, market strategist at Lord Abbett Co. in Jersey City, New Jersey,
which manages $100 billon in assets.

The plan produced by last week's European Union summit has failed to
convince investors that leaders have a firm grip on how to rein in the
region's debt crisis, resulting in growing pressure on the European
Central Bank to take bold steps, including large scale purchases of euro
zone sovereign bonds.

Amid objection from Germany, the ECB has so far resisted.

ECB President Mario Draghi said on Thursday that euro zone
governments are on the right track to restore market confidence but
reminded them that an emergency program to buy their bonds was "neither
eternal nor infinite."

Richard Batty, strategist at Standard Life Investments in London, noted the cross-currents buffetting financial markets.

"We have some respite through a good auction and of course the U.S.
data has been reasonably supportive," he said. "But we still do not have
a policy road map in place which enables Europe to avoid a slowdown and
get back on track. Standard Life Investments is part of the Standard
Life Group, which administers $303 billion of assets.

Spain drew solid demand for its bonds on Thursday, with its
borrowing costs for five-year debt more than 2 percentage points lower
than what Italy was forced to pay a day earlier.

The Dow Jones industrial average closed up 45.33 points, or 0.38
percent, at 11,868.81. The Standard & Poor's 500 Index finished up
3.93 points, or 0.32 percent, at 1,215.75. The Nasdaq Composite Index
ended up 1.70 points, or 0.07 percent, at 2,541.01.

An index of top European stocks ended up 1 percent, recouping half its drop on Wednesday.

Global stocks as measured by the MSCI world equity index were up 0.4 percent, erasing an earlier drop.

Tokyo's Nikkei ended down 1.7 percent following Wednesday's declines on Wall Street and in European equities.

The euro rose a day after hitting an 11-month low against the dollar.

The euro rose 0.26 percent to around $1.30 after having fallen as low
as $1.2945 on Wednesday. The next major support for the currency will
come at $1.2860, which is its lowest price this year.

The safe-haven Swiss franc got a boost after the central bank kept
its cap on the currency at 1.20 per euro, curbing speculation it would
move to weaken the franc further.

German Bund futures ended flat at 137.88, while benchmark 10-year
U.S. Treasury notes were flat in price for a yield of 1.91 percent after
touching 1.86 percent, their lowest yield since early October.

Gold, another traditional safety play, extended its recent decline,
as fund managers liquidated their holdings. The spot bullion price in
London was last down 0.5 percent at $1,566.20 an ounce, hovering above
its lowest level since late September.

In the oil market, January Brent crude futures expired up 7 cents at
$105.09 a barrel, but U.S. oil futures ended down $1.08, or 1.1
percent, at $93.87.

Oil and gold recorded their biggest one-day drop since late September
on Wednesday on worries that euro zone debt crisis could hurt the
global economy and commodity demand. - Reuters