Thursday, October 11 15:18:12
Spanish bond yields inched back towards the critical six percent mark today after a heavy downgrade from rating firm S and P.
However, hopes it could help persuade Madrid to take a bailout saw European shares and the euro pull away from recent lows.
Pan-European equities had started the day in the red but were well in positive territory while Wall Street enjoyed its first higher open for four days.
The brighter mood was helped by data showing the number of Americans filing new claims for unemployment benefits fell to the lowest level in more than four and a half years. "This is a lot better than expected. It's a number that is somewhat of a surprise and the market is going to react positively. It shows the trend that the labour market is slightly improving," said Peter Cardillo, Chief Market Economist, at Rockwell Global Capital in New York.
S and P 500 rose 0.7 percent as trading resumed. Dow Jones industrial average added 0.43 percent points and Nasdaq 100 rose 0.71 percent.
The Euro STOXX 50, which has lost 3 percent since the start of the week, clawed back early morning falls and accelerated after the U.S. numbers to stand 1 percent higher at 2482.84 points at 1345 GMT. Having been firm all day, the dollar extended gains to hit a session high versus the yen of 78.50 compared with 78.34 before the release.
Standard and Poor's piled additional pressure on Madrid late on Wednesday, as it cut the country's rating two notches to BBB- minus --one step from junk status-- and warned the intensifying recession and poor response from euro zone policymakers to the crisis had left it highly vulnerable.