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S&P 500 fluctuates near record, Euro equities rise on GDP data

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(Bloomberg) — The Standard & Poor’s 500 Index fluctuated near an all-time closing high as a drop in consumer confidence offset optimism about growth in Europe. Treasuries fell, while oil headed for a third week of gains.

The S&P 500 climbed 0.1 percent to 2,090.18 at 10:10 a.m. in New York, a point below its Dec. 29 closing record. The index briefly rose to an all-time high of 2,093.79 before paring the advance.

The Stoxx Europe 600 Index added 0.6 percent to the highest since 2007. Greek 10-year securities advanced for a second day, boosting Italian and Spanish debt. The yield on 10-year Treasury notes increased two basis points to 2.01 percent. Gold gained for a second day, and oil erased a weekly decline.

U.S. consumer confidence fell in February as gas prices started to rise from a six-year low and damped optimism about the economy. The euro-area economy picked up momentum at the end of last year, with Germany reasserting itself as the driver of growth, offsetting weakness in Greece and Italy.

The value of global equities climbed to more than $66 trillion this week, near a record, as concern eased over the Greek and Ukrainian crises and corporate profits at companies from Cisco Systems Inc. to PepsiCo Inc. topped estimates.

“The negative concerns don’t seem to be having an impact in the market,” Matt Maley, an equity strategist at Miller Tabak & Co. LLC in Newton, Massachusetts, said by telephone. “People are realizing that the situation in Greece is not systemically problematic. Oil’s been beaten up, that’s turning around.”

Bull Market

The S&P 500 approached its first record in 2015, bolstered by the biggest three-month rise in hiring in 17 years and signs of easing tensions between Greece and its euro-area creditors. The index has more than tripled during the bull market that is approaching the end of its sixth year.

The S&P 500 has rallied 4.8 percent in February after sinking 3.1 percent in January for its worst month in a year. Since the start of 2015, the index has experienced three declines of more than 2.7 percent, only to recover within a week each time, data compiled by Bloomberg show.

The Nasdaq Composite rose Thursday to the highest level in nearly 15 years. The technology gauge closed below 4,000 twice last year, on Feb. 3 and April 11, but has rallied nearly 22 percent since then. The gauge is now 3.8 percent below its all- time closing high of 5,048.62, set on March 10, 2000.

The strongest dollar in a decade and a plunge in oil prices that threaten investment and earnings growth have tested the resilience of investors as the bull market nears its sixth anniversary. Concern that European growth is slipping amid signs of deflation, coupled with a showdown that led to speculation Greece would exit from the region’s shared currency also weighed on investor sentiment.

Europe Growth

Those concerns eased this week, as data showed the economy in the euro area expanded 0.3 percent in the fourth quarter, according to the European Union’s statistics office. German gross domestic product grew 0.7 percent in the final three months of 2014, more than twice as much as estimated, after expanding 0.1 percent in the previous three months, the Federal Statistics Office in Wiesbaden said.

The Stoxx 600 advanced for a second day, heading for a 0.8 percent weekly gain. The DAX, the second-best stock index among developed markets this year, rose as much as 0.9 percent.

Greece’s ASE Index climbed 5 percent, heading for its highest close since Dec. 10, and the nation’s 10-year yield fell 88 basis points, or 0.88 percentage point, to 9.14 percent, leaving it lower for a second week.

Optimistic View

Greece is seeking a “new contract” with the euro area on how to continue its bailout, as talks resume and both sides signal willingness to compromise, according to government officials taking part in the talks.

“Markets are being driven by evidence that the European economy is recovering,” said Dirk Thiels, head of investment management at KBC Asset Management NV in Brussels. “The market is back to an optimistic view on Greece. Something has to happen before the end of the month, and markets seem to think that it will probably be a pretty smooth transition for Greece.”

Dutch Finance Minister Jeroen Dijsselbloem, who heads meetings of his euro-region counterparts, said a solution to the standoff will be “very difficult.” Terra Firma Capital Partners Ltd. founder Guy Hands said Greece “could well’ exit the euro area.

Europe Bonds

The gains in Greek bonds boosted confidence in the euro area’s other higher-yielding debt markets. Portugal’s 10-year rate fell 14 basis points to a record low 2.33 percent, Italy’s declined seven basis points to 1.58 percent and Spain’s was eight basis points lower at 1.54 percent. National equity gauges of those nations rose more than 0.8 percent.

German and U.K. government bonds fell on reduced demand for the safest fixed-income assets. The average cost of borrowing for investment-grade companies in Europe dropped to a record 0.94 percent, according to Bank of America Merrill Lynch’s Euro Corporate Index.

Among stocks moving on corporate news, CBS Corp. rose 3.9 percent in early New York trading after reporting quarterly results that beat estimates. Anglo American Plc gained 2 percent after posting full-year earnings that topped projections and writing down assets by $3.9 billion.

Emerging Equities

American International Group Inc. fell 2.2 percent after the insurer reported a decline in earnings. ThyssenKrupp AG, Germany’s largest steelmaker, lost 4.2 percent after posting profit that missed estimates. Seadrill Ltd. slumped 8.6 percent after the rig operator said it’s removing $1.1 billion worth of contracts with Petroleo Brasileiro SA from its order book.

The MSCI Emerging Markets Index added 1.1 percent, taking its advance this week to 0.3 percent. European Union leaders started work on further sanctions to prod Russia to enforce the cease-fire in eastern Ukraine as fierce fighting focused on a crossroad town of Debaltseve.

The accord struck between Ukrainian President Petro Poroshenko and his Russian counterpart Vladimir Putin envisages a truce from midnight on Feb. 15 and reaffirms some commitments from a failed September bid to end the conflict.

Micex, Ruble

Russia’s Micex Index climbed 1.3 percent, and the ruble strengthened 0.9 percent for a 3.1 percent rally in the past five days.

West Texas Intermediate increased 1.3 percent to $52.50 a barrel, heading for its longest stretch of weekly gains since May on speculation that a decline in U.S. drilling will slow production and curb a global supply glut. Apache Corp. is cutting its oil-drilling rigs by 70 percent while Total SA joins companies including BP Plc and Royal Dutch Shell Plc in reducing spending.

Gold added 0.2 percent to $1,224.63 an ounce and silver climbed 0.4 percent.

The yield on Japan’s 10-year bond rose three basis points to 0.42 percent after people familiar with Bank of Japan discussions said policy makers are concerned that any further stimulus could prove counterproductive right now. That’s more than twice the record low of 0.195 percent on Jan. 20.

–With assistance from Emma O’Brien in Wellington, Joseph Ciolli and Michelle F. Davis in New York, Naoto Hosoda in Tokyo, Sofia Horta e Costa, Paul Dobson, Stephen Kirkland, Shelley Smith and Lynn Thomasson in London, Anuchit Nguyen in Bangkok and Nick Gentle in Hong Kong.