Euro Rises on Greece, Portugal Debt Talks, Inflation; Stocks Erase Decline

 

The euro rebounded from the lowest level against the dollar
since March as leaders worked to alleviate debt crises in Greece and Portugal and
accelerating inflation put pressure on policy makers to boost interest rates. Stocks
and commodities recovered from early losses.

The euro rose 0.8 percent to $1.4233 at 12:39 p.m. in New York after inflation in
the currency block accelerated to the fastest pace since 2008. The dollar
weakened against 10 of 16 major peers. The Standard & Poor’s Index rose
less than 0.1 percent to 1,338.86, reversing a 0.5 percent drop, and the Stoxx Europe 600 Index erased most of
a 0.9 percent slide. The Thomson Reuters/CRB Index of raw materials recovered
from a 0.4 percent drop. Six-month Treasury bill rates were at 0.07 percent,
near a record low, as the U.S. reached its federal borrowing threshold.

European finance ministers are set to approve a 78 billion-
euro ($111 billion) bailout for Portugal,
while stepping up pressure on Greece to sell assets and deepen spending cuts in
exchange for an increase in its rescue. Progress on helping the two nations
eased concern that talks among global financiers in Brussels would be hampered
by the arrest of International Monetary Fund Managing Director Dominique
Strauss-Kahn on attempted-rape charges in New York.

“They are putting a patch on the problem,” said Matthew
DiFilippo, director of research at Stewart Capital Advisors LLC in Indiana, Pennsylvania, which
manages $1 billion. “I don’t really see there’s a way that they can fix it
without a restructuring. Still, investors are an emotional group of people. I
wouldn’t be surprised to see some market strength on efforts to give them a
longer lifeline.”

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