By Agency Reporter

Monday, 22 Nov 2010

Commodities sank after China told banks to set aside more reserves in an effort to curb inflation, while the euro gained amid prospects for a financial rescue for Ireland.

Bloomberg News reported on Saturday that United States stocks advanced after Nike Incorporated increased its dividend and earnings as technology companies topped estimates.

The S&P GSCI Index of commodities tumbled by 0.9 per cent in New York to extend a weekly slump to 2.8 per cent, its biggest slide since August. The euro climbed against 14 of 16 major peers. The Standard & Poor‘s 500 Index rose by 0.3 per cent to 1,199.73, erasing an earlier 0.6 per cent slide.

Irish bonds reversed a rally as Allied Irish Banks Plc said its reliance on funding from central banks tripled, underscoring the nation‘s need for a financial rescue.

Earlier declines in US stocks followed a drop in European equities after the People‘s Bank of China announced plans to increase banks‘ reserve ratio requirements by 50 basis points.

Optimism that an international bail-out for Ireland will limit contagion across Europe‘s larger debt markets helped to drive the euro higher against the dollar for three straight days.

”It‘s the fifth time China is doing this tightening and every time it happens, the world freaks out,” a money manager at New York-based BlackRock Incorporated, Mr. Kevin Rendino, said. ”People think it is going to be the beginning of the end,” he added.

The Dollar Index, which measures the currency against six major trading partners, slipped by 0.3 per cent to 78.413.

The best way to underpin the dollar and support the global recovery ”is through policies that lead to a resumption of robust growth in a context of price stability in the United States,” Federal Reserve Chairman, Mr. Ben Bernanke, said in a speech in Frankfurt. Countries that undervalue their currencies might eventually inhibit growth around the world and risk financial instability at home, he said.

Source: Punch