* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Currency markets edgy after suspected Japanese yen
intervention
NEW YORK/LONDON, July 12 (Reuters) – The dollar fell
sharply against the yen for the second straight day, raising
questions as to whether Japan was intervening while a global
equities index rose on Friday as investors eyed U.S.
interest-rate cuts and the U.S. earnings season kicked off.
The benchmark 10-year U.S. Treasury yields gained modestly
after the producer price index (PPI) rose more than expected in
June. Still, investors focused on Thursday’s data, which had
fueled bets on Federal Reserve interest-rate cuts in September.
The S&P 500 bank index was underperforming the
broader market, down more than 2%, as the first set of
second-quarter earnings and financial guidance from some of the
biggest U.S. banks failed to impress.
“Earnings season hasn’t gotten off to a great start but
we’re still very early. We’re seeing some companies talking
about their ability to control expenses. We’re looking for more
clarity as the season goes on,” said Celia Hoopes, portfolio
manager at Brandywine Group in Philadelphia.
But investors appeared less worried about Friday’s
hotter-than-expected PPI numbers after Thursday’s
cooler-than-expected consumer price index (CPI) had boosted
confidence that inflation was coming under control.
“The market’s shaking off the higher PPI print and continues
to look for the Fed rate cut in September as a result of the
lower CPI print from Thursday,” said Hoopes.
On Wall Street, at 11:10 a.m. the Dow Jones Industrial
Average rose 300.60 points, or 0.76%, to 40,054.35, the
S&P 500 gained 51.23 points, or 0.92%, to 5,635.77 and
the Nasdaq Composite gained 212.90 points, or 1.16%, to
18,496.31.
MSCI’s gauge of stocks across the globe rose
6.40 points, or 0.78%, to 830.67, hitting a record intraday
high. Europe’s Stoxx share index rose 0.95%, hitting
its highest level since June 7 and eyeing a second consecutive
week of gains and its biggest weekly gain since early May.
In currencies the yen jumped against the dollar to an almost
four-week high, putting traders on alert for signs of fresh
intervention by Japan, which likely stepped in Thursday to prop
up a currency still close to its lowest in 38 years.
While Tokyo had not confirmed any move on Thursday to prop
up the flailing yen, the Bank of Japan’s daily operations report
on Friday suggested between 3.37-3.57 trillion yen ($21.18-22
billion) had been spent on strengthening the currency.
The dollar index, which measures the greenback
against a basket of currencies including the yen and the euro,
fell 0.28% to 104.05, with the euro up 0.39% at $1.0907.
Against the Japanese yen, the dollar weakened 0.65%
to 157.76.
Meanwhile, sterling strengthened 0.59% at $1.2987,
hitting its highest level in almost a year and after comments
from Bank of England policymakers earlier this week and
better-than-forecast GDP data hurt bets for an August rate cut.
In Treasuries, yields advanced after the inflation data. The
yield on benchmark U.S. 10-year notes rose 1.1 basis
points to 4.204%, from 4.193% late on Thursday and the 30-year
bond yield rose 1.6 basis points to 4.4199%.
But the two-year note yield, which typically
moves in step with interest-rate expectations, fell 2.4 basis
points to 4.483%, from 4.507% late on Thursday.
Global oil prices rose, still reflecting optimism about U.S.
rate cuts. U.S. crude gained 0.61% to $83.12 a barrel and
Brent rose to $85.72 per barrel, up 0.37%.
Gold prices retreated as investors took profits after a
strong rally in the previous session, although bullion was still
on track for its third straight weekly rise on increased bets
around U.S. interest rate cuts.
Spot gold lost 0.13% to $2,411.74 an ounce while U.S.
gold futures fell 0.64% to $2,399.50 an ounce.
(Reporting by Naomi Rovnick and Dhara Ranasinghe in London;
Editing by Susan Fenton and Rod Nickel)
