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Euro stocks rise, thanks in part to American shoppers

Euro stocks climbed higher Tuesday after strong signs from US consumers and the Italian debt sales. But warnings over Italy could send euro, stocks tumbling soon.

By Herbert LashReuters / November 29, 2011

The euro rose 0.2 percent to $1.3341 on Tuesday. Meanwhile, euro stocks climbed higher despite warnings over Italy.

Sergio Perez/REUTERS

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Euro stocks rose and the euro gained Tuesday on a rebound in U.S. consumer confidence and after an Italian debt sale met strong demand despite record high rates that analysts warned were unsustainable.

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Stocks extended gains and the euro rose further against the dollar after the Conference Board, an industry group, reported that U.S. consumer confidence bounced back in November from a 2-1/2-year low as worries about job and income prospects eased.

European shares extended a low-volume rally into a third day on hopes policy makers will make progress toward containing the debt crisis at a meeting later on Tuesday, even as Italy sold three-year debt at a euro lifetime high.

The euro rose 0.2 percent to $1.3341.

``It is a great sign that the auction was oversubscribed, suggesting that we seem to be moving forward with progress there,'' said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management.

``That said, the yields remain quite high, so we're not sounding an all-clear just yet,'' added Zemsky, who helps oversee $445 billion in assets.

Italy had to offer a record 7.89 percent yield to sell its bonds, a stunning leap from the 4.93 percent it paid in late October. 

The costs were above the levels at which Greece, Ireland and Portugal applied for international bailouts. 

The FTSEurofirst 300 of leading European shares closed up 0.75 percent at 947.89 points.

Wall Street rallied on the consumer confidence report, another sign that the U.S. economy remains on the path of recovery, and on optimism that Europe is moving to resolve its debt crisis. 

At midday, the Dow Jones industrial average was up 67.66 points, or 0.59 percent, at 11,590.67. The Standard & Poor's 500 Index was up 6.92 points, or 0.58 percent, at 1,199.47. The Nasdaq Composite Index was down 3.92 points, or 0.16 percent, at 2,523.42. 

U.S. Treasury debt prices slipped as signs of a pickup in U.S. consumption eroded the safe-haven value of government debt., though bond investors took a cautious view on the events out of Europe. The benchmark 10-year U.S. Treasury note was down 13/32 in price to yield 2.02 percent.

U.S. Treasury market losses were limited because ``it is not like there is any comfort talk coming out of Europe,'' said David Coard, head of fixed-income sales and trading at The Williams Capital Group in New York. 

Crude oil prices pushed higher, lifted by initial enthusiasm over Italy's bond auction and as Iranian protesters stormed the British embassy in Tehran.

Brent crude futures rose $1.43 to $110.43 a barrel and U.S. crude futures gained $1.04 to $99.25 a barrel.

Gold prices rebounded. Spot gold prices rose 89 cents to $1,712.50 a barrel.