LONDON (Dow Jones)--The combination of some perky economic data and a surprise move to weaken the Swiss franc by the Swiss National Bank have seen European stock markets rise from the day's lows Wednesday, while the euro has also benefited, but haven bonds have slipped.
Having worried for months about the strength of the franc, the SNB got serious as European trade was getting under way and told the world it was aiming at a 3-month Swiss franc Libor rate of between zero and 0.25%, from the zero-to-0.75% range it was trying for previously.
The results were instant, with the euro rising from yet another record low against the Swiss unit, 1.0795. At 0944 GMT it bought more than three cents more at CHF1.1148. This also put a spring into the euro's step against the U.S. dollar; the single currency remains near the day's high $1.4345.
A strong set of euro zone retail sales, for June, also helped lift the euro and local stock markets. Sales rose 0.9% from May, nearly double the market consensus. In the U.K., meanwhile the service sector was found to have performed well in July. Its purchasing managers index rose to 55.4 from June's 53.9, again beating consensus.
July's outturn was particularly surprising given Monday's news of a sharp fall in the manufacturing index, for the same month.
The markets seem for the moment in the mood to grab any indication that there is life beyond the sovereign debt problems of the euro zone and the U.S., which have taken up so much of their time of late.
At 0945 GMT, the FTSE 100 in London was down 1% at 5656.40, but off the day's 5619.91 low. Frankfurt's DAC was also down 1% at 6725.59, but up from 6674.26 seen earlier, while the CAC-40 in Paris was down 0.7% at 3499.33, up from 3460.45.
They were also buoyed early by the affirmation of the U.S.' triple A credit ratings by both Moody's and Fitch as Congress passed its bill to raise the debt ceiling.
However, plenty of doubters remain.
"It is now clear to the markets that the current U.S. political state of affairs will not produce a deficit reduction plan that is sufficient to get the U.S. on a path to fiscal sustainability," said analysts at HSBC.
"This impasse is very worrying. It still not inconceivable the US will lose its AAA rating, even if it is for a short time."
However, for the moment the markets aren't listening. Bunds have not fared so well, thanks to a modest revival in risk appetite. The September futures contract was down 0.21 at 131.61 although one trader told Dow Jones that 'fast money,' especially hedge fund sellers, were pushing a thin market around.
Italian and Spanish government bond yields, meanwhile, pulled back from their early highs Wednesday amid unconfirmed rumors that Asian investors were buying euro-zone peripheral sovereign bonds.
Italian 10-year yields were at 6.093%, according to Tradeweb, 2.5 basis points lower than Tuesday and down from a new euro-era high of 6.227% seen in early trading.
Spanish 10-year yields fell back to 6.243%, also 2.5 basis points lower than Tuesday, having earlier risen to 6.388%--a move that took the spread to safe-haven German bunds to a record 404 basis points.
However, there remains much caution within the markets, with Italian bank Unicredit's results due at 1100 GMT and a speech by Italian Prime Minister Silvio Berlusconi on his beleaguered country's economic situation later Thursday firmly in focus.
-By David Cottle, Dow Jones Newswires; +44-20-7842-9436; david.cottle@dowjones.com
