* US consumer confidence up in early December, lifts dollar
* Commodity prices drop, U.S. Treasury debt prices weaken
* Peripheral European sovereign debt spreads widen
(Updates with U.S. markets, changes byline and dateline,
previous LONDON)
By Daniel Bases
NEW YORK, Dec 10 (Reuters) - Upbeat U.S. consumer
sentiment data on Friday boosted the U.S. dollar on confidence
the economy was steadily gaining strength, in turn pushing
down the prices of U.S. Treasury debt, oil and gold.
Share prices globally were flat to marginally higher on
the day. A stronger greenback squeezes the operating margins
for U.S. exporters, feeding into the recent inverse
correlation between the currency and U.S. stocks.
The MSCI All-Country World stock index <.MIWD00000PUS> was
up just 0.12 percent.
China's central bank raised lenders' required reserves by
50 basis points but left interest rates on hold, which also
allayed investors' concerns that aggressive policy tightening
could slow China's growth down too much. []
European shares gained on the U.S. data, but are off their
highs for the day.
Peripheral European sovereign credit deteriorated on
Friday as prices wax and wane while uncertainty remains over
whether policymakers can put to rest the concerns the debt
crisis is under control.
"The strength of the U.S. dollar could be viewed as waning
if it can be demonstrated credibly that U.S. deficits will
rise and conversely, the euro could rise comparatively," said
Tim Speiss, chairman, Personal Wealth Advisors at EisnerAmper
LLP in New York.
"However, the EU has its hands full with financing costs
related to Ireland and Greece, and potentially Spain and
Portugal, so we see no dramatic negative dollar impact tied to
this legislation at this juncture," he said.
The euro fell 0.18 percent to $1.3218 <EUR=>. The U.S.
Dollar Index <.DXY> , which measures the dollar against a
basket of major trading partner currencies, edged up 0.07
percent to 80.127. Against the yen, the greenback was up 0.30
percent at 83.93 yen <JPY=>.
Commodities priced in U.S. dollars weakened on the
currency's gains. Spot gold prices <XAU=> fell $10.16 to
$1,377.10 an ounce, while U.S. crude oil futures <CLc1> lost
85 cents, or nearly 1 percent, to $87.56 a barrel.
STOCKS NOTCH SLIM GAINS
U.S. data showed consumer sentiment rose more than
expected in early December, while import prices in November
rose at their fastest pace in a year. In another report
offering evidence of a firmer U.S. economic recovery, the
government said the U.S. trade deficit narrowed much more than
expected in October. For details, see
[][]
Robert Tipp, chief investment strategist for Prudential
Fixed Income in Newark, New Jersey, said the market is likely
to be stuck in a range as sentiment vacillates between
optimism and pessimism.
"Basically the market, after being excessively
pessimistic, is having to re-evaluate following the
announcement of QE2, better-than-expected data, and the
stimulus from the extension of the tax cuts. So the market had
a big swing in sentiment," Tipp said.
U.S. stocks skated between the plus and minus column. In
late morning trade, the Dow Jones industrial average <>
inched up just 0.60 of a point, or 0.01 percent, to 11,370.66.
The Standard & Poor's 500 Index <.SPX> edged up 1.43 points,
or 0.12 percent, to 1,234.43. The Nasdaq Composite Index
<> gained 4.36 points, or 0.17 percent, to 2,621.03.
Shares of Netflix Inc <NFLX.O> jumped after Standard &
Poor's said the movie rental company, along with F5 Networks
Inc <FFIV.O> and Newfield Exploration Co <NFX.N>, will replace
Office Depot Inc <ODP.N>, New York Times Co <NYT.N> and
Eastman Kodak Co <EK.N> in the S&P 500. Netflix was up 1.91
percent at $194.69.
The pan-European FTSEurofirst 300 <> index of top
shares rose 0.14 percent to 1,125.30, benefiting from the U.S.
consumer data.
Japan's benchmark Nikkei stock index <> fell 0.7
percent to close on Friday at 10,211.95 due to profit-taking.
But the Nikkei was up 0.3 percent for the week.
[]
In the credit markets, the premium that investors demand
to hold peripheral government bonds rather than benchmark
German debt rose on Friday with investors keeping to the
sidelines as the European Central Bank's bond buying slowed
down to a trickle.
The Portuguese/German 10-year bond yield spread
<PT10YT=TWEB> <DE10YT=TWEB> rose to 342 basis points from
around 328 bps at Thursday's settlement. The equivalent
Spanish <ES10YT=TWEB> spread was up at 9 bps at 248 bps.
The benchmark U.S. 10-year Treasury note<US10YT=RR> fell
14/32 of a point in price, driving the yield up to 3.259
percent. The yield is up roughly 25 basis points this week, on
track for the biggest gain in nearly a year.
(Reporting and writing by Daniel Bases; Additional reporting
by Julie Haviv, Leah Shnurr, Natsuko Waki, Ellen Freilich and
William James; Editing by Jan Paschal)
