FOX Business: The Power to Prosper
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Encouraging developments regarding Europe's sovereign debt crisis gave futures a boost, but continued economic worries restrained the gains.
American markets have been highly-sensitive to developments from the from the other side of the Atlantic as market participants have worried that Europe's sovereign debt crisis may pose a threat to the global financial system. Indeed, Greece, which has the highest debt to economic output ratio in the euro zone, has been teetering on the point of default for months and has required enormous rescue packages.
Moody's slashed the credit rating of two major French banks, Societe Generale and Credit Agricole, on Monday amid concerns over their exposure to Greek sovereign debt, which initially pressured European markets.
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However, commentary from European Commission President Jose Manuel Barroso suggesting it would present options for developing a so-called euro bond helped ease the tensions. A euro bond, analysts say, would likely be issued and backed by all 17 countries in the euro bloc.
This would be beneficial to struggling peripheral countries such as Greece and Portugal because stronger economies would essentially be underwriting the debt. Germany, the region's biggest economy, has strongly objected to such bonds recently, and a ruling by its Federal court would make it a difficult measure to pass.
The pace of major economic data releases is the heaviest on Wednesday and Thursday this week. Inflation at the wholesale level was unchanged in August, compared with expectations of a 0.1% decline. Excluding the food and energy components, prices were up 0.1%, a slightly smaller gain than the 0.2% economists forecast. A more closely-watched report on consumer inflation is expected to be released on Thursday.
Retail sales were also unchanged for the month, a weaker reading than the 0.2% gain economists anticipated. Analysts will be looking to what extent Hurricane Irene and growing economic headwinds hit sales by companies like Target (TGT) during the important back-to-school season.
In currencies, the euro gained 0.29% against the U.S. dollar, while the greenback fell 0.12% against a basket of world currencies.
Energy markets were modestly lower ahead of domestic oil inventory data slated for release later in the morning. Light, sweet crude fell 56 cents, or 0.62%, to $89.64 a barrel. Wholesale RBOB gasoline fell a penny, or 0.29%, to $2.73 a gallon.
Gold slipped $2.40, or 0.13%, to $1,828 a troy ounce. The yield on the benchmark 10-year Treasury note increased slightly to 2.017% as investors have moved back into equity markets this week.
Prices at the pump edged slightly lower overnight. A gallon of regular costs $3.63 on average nationwide, up from $3.59 last month, and well higher than the $2.72 drivers paid last year, according to the AAA Fuel Gauge report.
The English FTSE 100 jumped 1.6% to 5,258, the French CAC 40 climbed 1.7% to 2,945 and the German DAX soared 2.3% to 5,285.
In Asia, the Japanese Nikkei 225 slid 1.1% to 8,519 and the Chinese Hang Seng edged 0.08% higher to 19,045.