The euro surged to one-week highs against the dollar while stocks traded in narrow ranges Thursday after a successful Spanish bond auction provided some reassurance about Europe's debt crisis, AP reported. A seemingly more hawkish tone from European Central Bank President Jean-Claude Trichet on inflationary pressures also gave the single currency a lift _ the euro was trading 1.6 percent higher on the day at $1.3340, just shy of its earlier one-week high of $1.3354. The news that Spain managed to easily raise ¤3 billion ($4 billion) via an auction of five-year bonds further eased tensions following Portugal's own successful bond auction on Wednesday. Italy _ considered less vulnerable than Spain _ also successfully raised the money it was looking for in the bond markets. Analysts said the success of the auction has a lot to do with a more active role taken by the European Central Bank in recent days and growing speculation that the eurozone finance ministers, who meet in Brussels early next week, could discuss an increase in Europe's bailout fund as well as making it more proactive in dealing with the crisis. The ECB has reportedly been buying Portuguese bonds in the markets in an attempt to get the yield down. The evidence, at least in the markets, is that it has helped. Portugal's yield on its benchmark 10-year bond has fallen from a euro-era record of 7.18 percent on Monday to a current rate around 6.8 percent. Buying bonds supports their prices, taking pressure off the banks that hold them. It also lowers bond yields, which indicate the borrowing costs countries would face were they to go to the market for more credit. Comments from ECB chief Trichet helped the euro extend gains. He told a press briefing after the bank kept its main interest rate unchanged at the record low of 1 percent that inflation risks in the near-term were on the upside and that the economic data recently had been stronger than expected. -- SPA
