Dow average returns to 5-year high as euro, Italian bonds rally

Italy Debt

Italian 10-year securities pared a monthly decline as the Rome-based Treasury sold 4 billion euros of new 10-year bonds at an average yield of 4.83 percent. That’s up from 4.17 percent at a Jan. 30 auction. It allotted 2.5 billion euros of five-year notes at 3.59 percent, compared with 2.94 percent at last month’s sale.

European Union leaders piled pressure on Italy’s rival factions to form a unity government committed to budget rigor. EU President Herman Van Rompuy warned in Tallinn, Estonia, that backsliding on budget discipline and economic reforms would shatter market confidence in the 17-nation currency union’s crisis management.

European Central Bank President Mario Draghi said there are limits to what monetary policy can do and urged governments to implement structural reforms and build a sound political and economic union in the euro region.

“It is important to stress that the ECB’s mandate only extends so far,” Draghi said in a speech in Munich today. “There are clear limits to what monetary policy can and should aim to achieve. We cannot repair unsound budgets. We cannot clean up struggling banks. We cannot solve deep-rooted problems in the structure of Europe’s economies.”

Gasoline Plunges

Gasoline plunged 3.8 percent to $2.8672 a gallon as government report showed rising Eas Coast inventories as refineries restored production following maintenance.

The S&P GSCI Index of commodities decreased 0.5 percent even amid gains in 13 of the 24 commodities it tracks. Gold fell for the first time in three days as growing confidence about the economic recovery curbed demand for a protection of wealth. Futures for April delivery fell 1.4 percent to $1,593.50 an ounce. The metal is set to drop for a fifth month, the longest run of monthly losses since 1997.

The Nikkei 255 capped a two-day, 3.5 percent slump after closing at its highest level since September 2008 on Feb. 25. Toyota Motor Corp., the world’s biggest automaker, sank 2.3 percent today. The MSCI Asia Pacific excluding Japan Index rose 0.5 percent, led by gains in Australia, Indonesia and India.

The MSCI Emerging Markets Index gained 0.4 percent, rebounding from a two-month low. The Shanghai Composite Index advanced 0.9 percent on speculation China will take steps to support equities. India’s Sensex gauge added 0.7 percent after a government economic survey said growth is recovering.

Bloomberg News

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