Stocks in U.S. Trim Advance on Concern Over French, German Outlook at S&P

U.S. stocks trimmed gains (SPX), while the euro erased its advance versus the dollar and Treasuries pared losses, as the Financial Times reported that Standard & Poor’s will put France, Germany and other European nations on “creditwatch negative.”

The S&P 500 rose 1 percent to 1,256.7 at 2:23 p.m. in New York after climbing as much as 1.8 percent earlier. The Dollar Index was little changed at 78.587 after retreating as much as 0.6 percent, while the euro erased a gain of as much as 0.7 percent. Yields on 10-year Treasury notes climbed two basis points to 2.06 percent after rising eight points earlier.

S&P will release a statement later today and also plans to put the Netherlands, Austria, Finland an Luxembourg on “creditwatch negative, the FT reported, implying a 50 percent chance of a ratings downgrade within 90 days. Earlier gains in equities and the euro came after Italian Prime Minister Mario Monti proposed budget cuts and Germany and France pushed for a new European Union treaty to fight the debt crisis.

‘‘This is a period where rating agencies have to be more cautious,’’ Eric Teal, chief investment officer at First Citizens Bancshares Inc., which manages $4 billion in Raleigh, North Carolina, said in a telephone interview. ‘‘It’s conceivable that there will be more downgrades. There’s some optimism building there that if Europe has a bold enough plan, they could put some of the problems behind. We’re still skeptical because of the many structural problems that require long-term solutions.”

The MSCI All-Country World Index posted a sixth consecutive day of gains, the longest winning streak since October and adding to its biggest weekly rally since 2009, and the Stoxx Europe 600 rose for a second day. Italy’s FTSE MIB Index rallied 2.9 percent as Banca Monte dei Paschi di Siena SpA and Banco Popolare SC climbed more than 10 percent.

To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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