While you were sleeping: Irish acceptance

Thursday 18th November 2010

Equities steadied in Europe and edged higher on Wall Street as Ireland bent towards accepting a bailout from the IMF, ECB and the EU - despite saying it didn't need it.

In late trading, the Dow Jones industrial average was down 0.03 points at 11,023.47. The Standard & Poor's 500 Index was up 2.48 points, or 0.21%, at 1,180.82. The Nasdaq Composite Index was up 13.91 points, or 0.56%, at 2,483.75.

In Europe, the Stoxx 600 ended 0.5% higher.

International financial officials were flying into Dublin to review the books of the country's biggest banks, setting the stage for a rescue of them before the situation takes a turn for the worse.

Irish government officials continue to insist the country is well funded through mid 2011 but analysts noted that the reality is that Ireland has lost the confidence of the market and needs to accept help whether or not it wants. The reluctant acceptance of that reality was seen as key for steadying equities and the euro overnight.

"If we get a resolution to Ireland's problems, you could see the euro bounce," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters.

In New York trade, the euro rose as high as US$1.3539 and last traded at US$1.3547, up 0.41% from the prior close. The dollar was down 0.11% at 83.17 yen and last traded at 0.9895 Swiss francs, down 0.6%. Both were the session lows.

"Investors are realising that there will be a solution for the Irish situation that won't end up in global contagion." Qunicy Krosby, chief market strategist for Newark, New Jersey-based Prudential Financial said.

The run on the commodities markets also steadied overnight with gold little changed and with copper reversing some of its losses.

Spot gold was bid at US$1,340.00 an ounce at 1615 GMT against US$1,339.80 late in New York on Tuesday.

Nickel prices jumped as much as 5.1% in London amid concern there will be a military coup in Madagascar that will delay supplies from the IS$4.65 billion Ambatovy mine.

It wasn't as good a day for oil amid continuing concern that higher interest rates in China would choke demand for crude. By 12.58pm EDT (1758 GMT), US crude for December delivery was down US$1.60 at US$80.74 a barrel, having dropped to a session low of US$80.55, the lowest in more than two weeks.

The tendency of China's central bank to raise interest rates around the 20th day of the month makes this coming Friday a "sensitive window" for a rate rise, Reuters reported.

As far as the world's key central bank is concerned, its officials continued press that their view of the world is correct.

Federal Reserve Chairman Ben Bernanke met with US senators today to defend his expansion of record monetary stimulus, saying it would aid job growth and the central bank would control any inflation, Bloomberg reported.

Bernanke said that he and his colleagues "remain absolutely committed to not letting inflation or inflationary expectations get out of control".

Today the greenback lost ground against 12 of 16 most-traded counterparts after a report showed that US consumer prices excluding food and fuel had the lowest annual increase on record and housing starts declined.

Businesswire.co.nz

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