* New Greek program to rein in budget deficit buoys market
* Euro gains, but U.S. stocks slip on Obama reform fears
* U.S. bond prices slip on slower private job losses data
* Oil rises toward $81 barrel despite US inventory report
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, March 3 (Reuters) - The euro rose against the
dollar on Wednesday after Greece agreed to further budget cuts
in hopes of obtaining European help, while world stocks gained
on data that suggested economic recovery remains on track.
But U.S. stocks pared gains late in the day to close little
changed as the White House stepped up its efforts to overhaul
health-care and banking regulation, sparking concerns about the
potential impact on corporate profits in those sectors. For
details see: [] []
Oil climbed toward $81 a barrel as the weaker dollar and
positive economic sentiment outweighed a U.S. government report
showing a large rise in crude inventories. []
In a sign of market optimism, some key risk premiums in the
short-term U.S. interest rates market registered their tightest
levels ever, prompted by the view the Federal Reserve will
maintain its ultra-loose monetary policy into late 2010.
[]
The gap between the three-month Treasury bill rate and the
three-month cost that banks charge each other to borrow
three-month dollars, called the TED spread, hit an all-time low
of 11 basis points.
Upbeat reports on the U.S. labor market and the service
sector, which grew at its fastest pace since the U.S. entered
recession in December 2007, did not dispel the belief that the
Fed will leave key rates near zero until the recovery proves
durable. []
The euro climbed as high as $1.3736 <EUR=>, its strongest
since Feb. 17, before easing to $1.37.
World stocks, as measured by MSCI's all-country index
<.MIWD00000PUS> gained 0.7 percent, helped by a fourth straight
day of gains in European shares.
But a final push for health-care reform by President Barack
Obama and a renewed effort by his administration to ban
proprietary trading by banks, despite signs that lawmakers were
unlikely to adopt such a rule, spread unease on Wall Street.
"As soon as the president started talking about jamming
healthcare through, I think that added to some of the negative
bent on equities. But it's not on tremendous volume," said Dave
Lutz, managing director at Stifel Nicolaus in Baltimore.
"He came across as saying he's going to do whatever it
takes to get his agenda through, and obviously that agenda has
been viewed as theoretically negative for a lot of sectors in
equities," Lutz said.
The Dow Jones industrial average <> closed down 9.22
points, or 0.09 percent, at 10,396.76. The Standard & Poor's
500 Index <.SPX> rose 0.48 points, or 0.04 percent, at
1,118.79. The Nasdaq Composite Index <> fell 0.11 points,
or 0.00 percent, at 2,280.68.
Oil prices gained despite a government report showing that
U.S. crude stocks rose by 4.1 million barrels last week, more
than the 1.4 million barrel increase forecast. Gasoline stocks
rose 700,000 barrels, slightly more than expected. []
U.S. crude <CLc1> rose $1.19 to settle at $80.87 a barrel,
trading as high as $81.23 intraday. In London, Brent crude
<LCOc1> gained $1.07 to settle at $79.25.
The benchmark 10-year U.S. Treasury note <US10YT=RR> slid
4/32 in price to yield 3.62 percent.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.68 percent at 79.976.
Against the yen, the dollar <JPY=> fell 0.34 percent at
88.44.
Greece's cabinet approved a sweeping austerity program, the
third in as many months, that aims to rein in a bulging budget
deficit by targeting civil servants, the rich and the church.
[]
Germany was quick to temper Greek hopes and market
expectations for more concrete support, saying it would offer
no aid when Chancellor Angela Merkel and Greek Prime Minister
George Papandreou meet in Berlin on Friday. []
But European Commission President Jose Manuel Barroso said
Greece's plan to save an extra 4.8 billion euros ($6.5 billion)
-- an amount equal to about 2 percent of the country's gross
domestic product -- would be backed by European solidarity.
[]
"There's some expectation for the EU to step in eventually
and provide assistance," said Todd Elmer, currency strategist
at Citigroup in New York. "We remain skeptical that EU
assistance for Greece will go far to address underlying
structural challenges."
(Reporting by Ryan Vlastelica, Edward McAllister, Richard
Leong, Wanfeng Zhou and Chris Reese in New York; writing by
Herbert Lash; Editing by Leslie Adler)
