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US stocks steady, euro slips before Greek vote

US stock prices held steady yesterday as Federal Reserve chair Janet Yellen affirmed a likely interest rate increase by year-end, while the euro fell ahead of a Greek government vote on whether to accept tough terms for a vital third bailout.

Oil prices fell on worries of growing supply from Iran following a landmark deal that would lift sanctions that have curbed its oil sales for several years.

“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate,” Yellen said in a testimony prepared for a US House panel.

Economists reckoned the US central bank will likely end its near-zero rate policy in September, while traders bet such a move would occur in December.

While a Fed ‘lift-off’ raises domestic borrowing costs, the expected slow pace of rate normalisation shouldn’t cut much into corporate profits, analysts said.

“The Fed just wants to catch up with it and get to more normalized levels,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

In early US trading, the Dow Jones industrial average rose 5.64 points, or 0.03 per cent, to 18,059.22, the S&P 500 gained 1.92 points, or 0.09 per cent, to 2,110.87 and the Nasdaq Composite added 13.02 points, or 0.26 per cent, to 5,117.91.

The dollar strengthened against a basket of currencies, with the dollar index last up 0.5 per cent at 97.10. Benchmark US 10-year Treasuries yields edged up 1 basis point at 2.412 per cent.

As traders monitored fresh clues on the timing of a Fed rate increase, they awaited news on whether Greece’s Parliament will approve a third bailout to avert bankruptcy and a possible exit from the eurozone currency bloc.

The euro was down 0.4 per cent against the dollar at $1.09680 and was flat at 135.845 yen.

The pan-European FTSEurofirst 300 index was up 0.4 per cent to 1,586.80, rising five days in a row.

Yields on German Bunds fell nearly 7 basis points to 0.78 per cent. Steady to higher US and European equity prices offset the drop in some Asian and emerging market stocks despite better-than-expected Chinese economic data.

In the oil market, Brent crude was down 83 cents or 1.4 per cent at $57.66 a barrel, while US oil futures were down 77 cents or 1.4 per cent at $52.27. Spot gold prices were down 0.7 percent at $1,147.21 an ounce.

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