* Euro falls broadly, dollar rises in anxious market
* Drug makers lift U.S., European stocks on U.S. voter bet
* Treasuries fall, U.S. stocks up on election hopes
* Oil dips below $78 a barrel as OPEC trims demand outlook
(Updates with U.S. markets, changes byline; dateline
previously LONDON)
By Herbert Lash
NEW YORK, Jan 19 (Reuters) - The euro fell broadly on
Tuesday on persistent worries about Greek finances and sour
German investor sentiment, while drug makers lifted U.S. and
European equities on a bet U.S. health-care reform may be on
the ropes.
A bigger-than-expected decline in German investor sentiment
pushed the euro near its lowest level against the dollar this
year, adding to woes from flagging market confidence in
Greece's public finances. [] and []
Speculation that a special U.S. Senate election in
Massachusetts could be won by a Republican and benefit
companies also affected the U.S. Treasury market, pushing bond
prices slightly lower. For details see:[]
[]
Investors were keeping an eye on the tight race to fill the
vacant seat of the late Edward Kennedy. The vote could break
the Democrat's filibuster-proof majority in the U.S. Senate and
jeopardize President Barack Obama's health-care reform plans.
The Massachusetts election was the most important market
event of the day, said William O'Donnell, the head of Treasury
strategy for RBS Securities in Stamford, Connecticut.
"It actually could be good for both markets," O'Donnell
said of a potential Republican win. He said many investors see
health-care reform "as a grand spending plan that could
potentially hurt the deficit even more."
The S&P Healthcare Index <.GSPA> climbed 2.2 percent, led
by health insurer Humana Inc <HUM.N>, whose shares jumped 6.2
percent.
Pharmaceutical companies also advanced. Merck & Co <MRK.N>
rose 3.2 percent and Pfizer Inc <PFE.N> gained 2.4 percent in
the United States, while AstraZeneca <AZN.L>, GlaxoSmithKline
<GSK.L>, Sanofi-Aventis <SASY.PA> and Novartis <NOVN.VX> added
1.1 percent to 2.1 percent in Europe.
"There is a possibility that the Democrat candidate in
Massachusetts might get booted," said David Buik, partner at
BGC Partners. "If that were the case, President Obama may have
a problem with his health-care bill, which takes temporary
shackles off the cost of drugs."
Shortly after midday, the Dow Jones industrial average
<> was up 95.53 points, or 0.90 percent, at 10,705.18. The
Standard & Poor's 500 Index <.SPX> was up 11.25 points, or 0.99
percent, at 1,147.28. The Nasdaq Composite Index <> was up
26.25 points, or 1.15 percent, at 2,314.24.
European shares hit their highest close in more than 15
months, boosted by Kraft Foods' <KFT.N> agreement to buy
British chocolate maker Cadbury Plc <CBRY.L> for about 11.9
billion pounds ($19.6 billion). []
The pan-European FTSEurofirst 300 <> closed up 0.8
percent at 1,069.03 points.
The euro fell below $1.43 to a four-week trough beneath its
200-day moving average. It also hit a four-month low against
sterling after the Kraft-Cadbury deal, increasing demand for
British currency. [].
The euro <EUR=> was down 0.74 percent at $1.4279.
"Sentiment has definitely soured based on what's happening
in Greece, and the fall in German confidence didn't help. All
we've seen is euro sellers across the board," said Dean
Popplewell, chief strategist at OANDA, an FX brokerage in
Toronto.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.64 percent at 77.558.
Against the yen, the dollar <JPY=> was up 0.46 percent at
91.14.
Gold struck a subdued note, with upside progress restricted
by currency fundamentals as the dollar strengthened against the
euro.
Spot gold prices <XAU=> rose $5.50 to $1138.00 an ounce.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 6/32 in price to yield 3.67 percent.
UK gilts slid after British inflation accelerated in
December at a record pace, prompting worries that interest
rates might rise sooner than expected. Bund futures tracked
gilt losses to overturn early gains, and euro zone government
bond futures also fell. [] []
Oil was below $78 a barrel for most of the session,
extending a recent losing streak after the Organization of
Petroleum Exporting Countries said supply was ample to meet
winter demand and trimmed estimated demand for its oil.
[]
OPEC, the source of more than one-third of the world's oil,
said in a monthly report that demand for its oil would average
28.59 million barrels per day in 2010, 20,000 barrels per day
less than expected last month.
U.S. light sweet crude oil <CLc1> rose 8 cents at midday to
$78.08 per barrel.
Asian stocks fell. The MSCI index of Asia Pacific stocks
outside Japan <.MIAPJ0000PUS> slipped 0.3 percent, and Japan's
benchmark Nikkei average <> dipped 0.8 percent.
(Reporting by Ryan Vlastelica, Steven C. Johnson, Emily
Flitter in New York; Ikuko Kurahone, Harpreet Bhal, William
James in London; writing by Herbert Lash; Editing by Leslie
Adler)
