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Shares, euro rise on hopes for Spain dealUS-MARKETS-GLOBAL:Shares, euro rise on hopes for Spain deal
By Ryan Vlastelica
NEW YORK (Reuters) - Stocks and the euro rebounded on Friday, with sentiment over Europe improving as Spain worked on reforms and would soon seek a bailout package that could resolve its debt problems.
Spain is considering freezing pensions and speeding up a planned rise in the retirement age as it races to cut spending and meet conditions of an expected international sovereign aid package, sources with knowledge of the matter said.
The Spanish deputy prime minister later denied the Reuters report.
Oil prices, meanwhile, rose on supply worries arising from the geopolitical situation in Libya and lower North Sea production. Brent climbed above $111 a barrel.
Concerns over the euro zone's debt crisis have kept markets in check this past week, with investors worrying Spain might not seek a bailout package, thereby calling into question the country's ability to deal with its debt.
"The problems are very big (in Spain and Europe in general), it's possible this is the beginning of the workout of the situation. It certainly takes some pressure off," said Rick Meckler, president LibertyView Capital Management in New York.
The report of Spanish reform boosted sentiment. U.S. stocks rose 0.4 percent while European shares <.FTEU3> added 0.5 percent and the MSCI global index <.MIWD00000PUS> climbed 0.7 percent. The expiration of options contracts could spur some volatility later in the session.
U.S. equities were also boosted by Apple Inc <AAPL.O>, the most valuable U.S. company, which is debuting the latest version of its iPhone worldwide. Shares rose 0.6 percent to $703.17.
With Friday's gains, the S&P is now essentially flat on the week but year to date the benchmark index has risen 16 percent, boosted by concerted central bank stimulus measures for the economy. Investors have been looking for reasons to keep pushing equities higher after steep gains since June.
The Dow Jones industrial average <.DJI> was up 32.36 points, or 0.24 percent, at 13,629.29. The Standard & Poor's 500 Index <.SPX> was up 4.85 points, or 0.33 percent, at 1,465.11. The Nasdaq Composite Index <.IXIC> was up 15.39 points, or 0.48 percent, at 3,191.35.
The euro, which has lost around 1.5 percent since hitting a 4-1/2 month high a week ago, was up 0.1 percent at $1.2975 by lunch having briefly climbed back above the psychological $1.30 mark.
The dollar fell 0.1 percent against a basket of currencies, with the its index <.DXY> at 79.325, bringing it closer to a six-and-a-half month low of 78.601 hit last week in the wake of aggressive monetary easing by the U.S. Federal Reserve.
With all eyes on whether Spain will call for aid, support for the euro was seen at Thursday's low, which stood just above its 233-day moving average at $1.2915.
Markets brushed off a well-flagged report from the UK showing its plans to bring down its deficit have fallen behind target as the European debt crisis has hit global growth.
It followed Italy's warning late on Wednesday that its recession will be far more severe than forecast, making it harder to reduce the country's debt burden.
Underlining the fears about faltering global growth, the World Trade Organization cut its global trade forecast to 2.5 percent from 3.7 percent on Friday.
In bond markets, the benchmark 10-year U.S. Treasury note was down 3/32 in price, with the yield at 1.7736 percent, as talk Spain might soon request a bailout was said to favor riskier assets.
Spain and Italy's 10-year bond yields were slightly higher although demand for German government bonds also eased, with December Bund futures 15 ticks lower at 140.15.
The ECB's new plan, which requires struggling countries to submit to fiscal rehabilitation programs in order to qualify for bond-buying support in the open market, has been one of the key factors in the sharp drop in Italian and Spanish borrowing costs and the 15-20 percent surge in major stock markets.
Gold prices hovered at a 6-1/2 month high, rising 0.2 percent to $1,770.76 an ounce supported by the ongoing lift from the recent aggressive moves from the Fed, ECB and the bank of Japan.
(Additional reporting by Nigel Hunt, Tricia Wright and Luke Pachymuthu; Editing by Kenneth Barry)
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