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Broadgate: Market News 17/4

17 April 2012

The euro lost ground slightly and German government bond prices edged away from record highs on Tuesday as investors waited to see if concerns over Spain’s budget deficit and banking sector push up borrowing costs at a debt sale.

Spanish 10-year bond yields traded above the key six percent level for a second day with investors increasingly worried the country’s economic worries will reignite the euro zone debt crisis.

The Dow rose on Monday as robust U.S. retail sales data helped large-cap consumer stocks, but a 4 percent slide in Apple hurt the Nasdaq.

Apple wasn’t the market’s only worry. Spain’s rising borrowing costs and a weak New York state manufacturing report stirred concerns about Europe’s debt crisis and the U.S. economic recovery.

“The market behavior is fairly manic today and investors are confused after a mixed set of data, Spanish yields, and momentum stocks like Apple losing ground,” said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

Gold edged down on Tuesday as the euro weakened with Spain’s surging borrowing costs fuelling worries about Europe’s debt crisis, but safe-haven demand may keep a floor under prices.

Sentiment in the euro remained vulnerable ahead of a Spanish debt auction later in the day. Spain is set to see its borrowing costs leap when it sells short-term bonds after jitters over its deficit and banking sector pushed longer term risk premiums above 6 percent on Monday.

Analysts said gold’s safe-haven appeal may attract investors again if the situation in Europe worsens.





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