* Spain, Italy yields nudge higher after Spanish downgrade
* Italy calms nerves by selling almost 6 bln euros of bonds
* Lower-than-expected U.S. GDP leaves Fed easing door open
By Luciana Lopez
NEW YORK, April 27 (Reuters) – Spanish and Italian borrowing
rates nudged higher on Friday after a two-notch downgrade of
Spain’s sovereign credit rating, but equities rose as investors
saw strong earnings outweighing worries about slowing growth in
Europe and the United States.
U.S. stocks advanced in early trading, with Amazon the
latest company to extend an earnings-driven rally that has
erased most of April’s losses.
European shares gained as well, as Swedish machinery and
tool maker Sandvik and France’s Vinci jumped
after encouraging earnings figures.
“By and large, earnings season has been positive and has
proven to be an offset to the euro debt situation and to the
mixed economic numbers of late,” said Andre Bakhos, director of
market analytics at Lek Securities in New York.
The Dow Jones industrial average gained 32.55 points,
or 0.25 percent, to 13,237.17. The Standard & Poor’s 500 Index
gained 3.52 points, or 0.25 percent, to 1,403.50. The
Nasdaq Composite Index gained 6.34 points, or 0.21
percent, to 3,056.95.
The FTSEurofirst 300 index of top European shares
climbed 0.76 percent.
But investors pushed Spain’s 10-year borrowing rate briefly
above 6 percent, after Standard & Poor’s late on Thursday cut
Spain’s credit rating to BBB plus on concern about the
government’s exposure to its ailing banks.
Yields on the 10-year bond slipped backed
later to around 5.914 percent. Italian yields were also slightly
higher, but nerves eased as it sold 5.95 billion euros of new
bonds without incident, even though at higher rates.
The euro edged higher, boosted by the Italian debt auction
as well as the possibility of more easing from the U.S. Federal
Reserve after U.S. growth data came in lower than expected.
First-quarter U.S. economic growth cooled as businesses cut
back on investment and restocked shelves at a slower pace. Gross
domestic product expanded at a 2.2 percent annual rate, below
economists’ expectations for a 2.5 percent pace.
The data were “certainly a bit of a mixed picture,” said
Camilla Sutton, chief currency strategist at Scotia Capital. “It
does open the door for the Fed to remain dovish.”
Still, the euro has been a rangebound recently, trading
largely within $1.3 to $1.34 for much of the year.
The single currency rose 0.33 percent to $1.3252 on
Friday.
