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.
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