* Euro's sharp rise on solid debt auctions, hawkish ECB
* U.S. stocks pare losses, European shares close down
* Oil rebounds, grains rise but precious metals lower
(Updates with European market close, adds comment)
By Daniel Bases
NEW YORK, Jan 13 (Reuters) - The euro surged on Thursday,
taking on renewed vigor after better-than-forecast debt
auctions by Spain and Italy and a hawkish rate view from the
ECB while oil pared its losses after comments from OPEC.
The euro got an extra boost after European Central Bank
President Jean-Claude Trichet said the euro-zone economy faces
short-term inflationary pressures. The ECB had earlier left
interest rates unchanged at 1 percent. []
"He sent a mild warning to markets that the ECB's
assessment on interest rates could change," said Commerzbank
economist Michael Schubert.
"What was more striking was that he emphasized that the
ECB raised rates in July 2008, which stresses that the ECB
could still raise rates in very uncertain times," Schubert
added.
Oil prices cut losses, keeping $100 a barrel within
striking distance, but gold could not capitalize on the weaker
greenback.
A delegate from a Gulf OPEC member state told Reuters on
Thursday OPEC will only hold an emergency meeting if oil
climbs above $100 and stays there, although the group's Gulf
members could informally add supply if needed.
[]
Grain prices in Chicago trade touched their highest levels
in 2-1/2 years on food price inflation and supply concerns.
Wall Street struggled after weak U.S. jobless claims data,
trading in a tight range.
European shares closed lower, although Spanish banks
provided a pocket of strength following the solid sovereign
bond auctions in Spain and Italy on Thursday. These followed a
relatively easy sale of Portuguese debt on Wednesday.
Analysts cautioned that the sales represented a very small
percentage of supply from those countries this year.
"We remain skeptical overall," said Mark McCormick,
currency strategist at Brown Brothers Harriman in New York.
"We don't see any strong momentum behind these moves. We think
it's just a short-term move and the euro is going to continue
to suffer for the remainder of the quarter."
The euro rose 1.77 percent to $1.3368 <EUR=> on the day,
but still down 0.08 percent so far this year. Against the
Swiss franc, the euro reached a new 1-month high to trade at
1.2860 francs <EURCHF=>.
The dollar fell 0.31 percent against the Japanese yen to
trade at 82.68 <JPY=>. Against a basket of currencies, made up
of its major trading partners, the U.S. dollar fell 1.20
percent <.DXY>.
U.S. light sweet crude oil <CLc1> fell 4 cents, to $91.82per barrel, having been as low as $91.12 in early trade. Spot
gold prices <XAU=> fell $2.05, or 0.15 percent, to $1,383.90.
STOCKS EBB ON JOBLESS CLAIMS
A surprisingly large increase in new weekly claims for
U.S. jobless benefits soured the mood in the U.S. stock market
while food and energy costs lifted December producer prices.
The claims rose to 445,000 from 410,000 in the prior week,
the biggest one-week climb in about six months, which
countered expectations for a small drop. []
U.S. shares traded mostly lower. The Dow Jones industrial
average <> fell 18.36 points, or 0.16 percent, to
11,737.08. The Standard & Poor's 500 Index <.SPX> lost 0.47
point, or 0.04 percent, to 1,285.49. The Nasdaq Composite
Index <> rose 1.93 points, or 0.07 percent, to 2,739.26.
Shares of drugmaker Merck & Co <MRK.N> fell 6.48 percent
to $34.74 after it said it would pull a blood clot drug from
one study and not give it to some patients in a late-stage
trial. Vorapaxar, seen as having large sales potential, was
deemed inappropriate for stroke patients. []
The FTSEurofirst 300 <> index of top European shares
closed down 0.57 percent at 1,157.34 points after jumping 1.5
percent to a 28-month high in the previous session.
Spain's Banco Santander <SAN.MC> and BBVA <BBVA.MC>
climbed 4.79 percent and 6.32 percent respectively, while
Spain's IBEX35 <> rose 2.67 percent after Madrid sold 3
billion euros of 5-year bonds. Rome sold 6 billion euros of 5-
and 15-year debt.
European mining shares were among the top decliners as key
base metals prices fell. Copper slipped after two days of
strong gains on worries about waning demand in top metals
consumer China, which is approaching its new year holidays.
The STOXX Europe 600 Basic Materials index <.SXPP> fell
1.84 percent.
Tokyo shares closed at an eight-month high and Shanghai
stocks rose, but European bourses weakened in late trade while
U.S shares were mostly lower. In contrast, MSCI's All-Country
World index <.MIWD00000PUS>, reached a fresh 28-month high
before paring some gains.
In the debt markets, euro-zone interest-rate futures fell
while two-year German bond yields rose to their highest levels
since December as traders raised bets on a future interest-
rate hike after Trichet's hawkish comments on inflation.
The two-year German Schatz yield rose to a 3-1/2-week high
of 1.114 percent after Trichet said the bank had not
precommitted not to move rates and added that they had hiked
rates in July 2008 as the financial crisis got under way.
[]
U.S. benchmark 10-year Treasury prices rose 17/32 of a
point in price, pushing the yield down to 3.30 percent
<US10YT=RR>.
(Additional reporting by Jeremy Gaunt, Nigel Davies, Atul
Prakash, Emelia Sithole-Matarise, Ryan Vlastelica, Pedro
Nicolaci da Costa and Paul Carrel; Editing by Jan Paschal)
