Europe Stocks Stem Losses; Italian Aid Lifts Bonds: Markets Wrap – Bloomberg

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European stocks paused two days of declines, and Italy’s bonds climbed as the nation decided pledged to provide support for its ailing lenders.

The Stoxx Europe 600 Index held this month’s 5.3 percent rally that has taken it within 1.6 percent of wiping out its losses for the year. Italian 10-year bonds outperformed major European securities after the government said it will plow as much as 20 billion euros ($21 billion) into the country’s banks and Banca Monte dei Paschi di Siena SpA said it will ask for a “precautionary” capital increase. Deutsche Bank AG also rose after the lender agreed to settle U.S. mortgage probes. Gold headed for a seventh consecutive weekly decline, the longest run since August 2015, and crude oil fell.

The removal of a legal cloud over Deutsche Bank and rescue of Monte Paschi has stemmed losses in European shares, after they fell from the highest level in almost a year earlier this week. In the U.S., a rally that took indexes to a record stalled as the Dow Jones Industrial Average neared 20,000 and as trading wound down before December holidays. In the last day of trading before Christmas in Europe, stock volumes were about 40 percent lower than the 30-day average.

“News that Monte Paschi is set to receive state aid to keep the bank and troubled peers afloat is something of a relief,” said Mike van Dulken, head of research at Accendo Markets in London. Questions remain about how bond prices will react and how retail investors will be compensated, he said.

Read More: Markets live blog here. 

Bonds

  • Treasuries gained as the 10-year yield fell one basis point to 2.54 percent as of 8:02 a.m. in New York.
  • Italian 10-year yields declined five basis points to 1.80 percent, while German bund yields slid three basis points to 0.22 percent.

Stocks

  • The Stoxx Europe 600 Index gained less than 0.1 percent.
  • Deutsche Bank climbed 0.8 percent as it agreed to pay $7.2 billion to resolve a years-long U.S. investigation into its dealings in mortgage-backed securities. Its Tier 1 notes, the first to take losses in a crisis, gained about 4 cents cents on the euro to 86.5 cents, the highest since Jan. 28, according to data compiled by Bloomberg

Currencies

  • The dollar gained against eight of its Group of 10 nation peers.
  • The pound fell 0.4 percent to $1.2240, the lowest level versus the greenback since Nov. 2, even after data showed the U.K. economy expanded more than initially reported in the third quarter.

Commodities

  • Gold for immediate delivery edged higher in London trading, adding 0.2 percent to $1,130.50 an ounce. It’s still set for a seventh week of declines.
  • West Texas Intermediate crude for February delivery in New York fell 1.1 percent to $52.37 a barrel.

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