NEW YORK: World stocks edged higher while the euro gained for a fourth day on Thursday as a Spanish debt sale saw good demand, keeping hopes alive that the euro zone debt crisis may be contained.
The gains follow a sharp rise in stocks and other riskier assets on Wednesday, when the world's six major central banks said they would cut the cost of existing dollar swap lines and arrange bilateral swaps to provide liquidity for other currencies.
Gold prices rose to their highest in two weeks on Thursday as the central banks' move gave investors confidence to cut their holdings of cash.
US stocks edged lower, with profit-taking following Wednesday's big gains partially offset by a report showing the pace of growth in the US manufacturing sector picked up in November to its strongest level since June.
Spanish government bond yields fell following the auction, and investors are looking to see whether euro zone policymakers will follow through with measures to solve the debt crisis during a meeting on Dec. 9.
Headlines out of Europe have caused much volatility in markets in recent months, with the region's debt crisis fueling worries about a major global financial crisis.
MSCI world equity index was up 0.3 percent, gaining for a fourth consecutive session, after rising to a two-week high. The index is still down about 8 percent since January, however.
The Dow Jones industrial average was down 34.96 points, or 0.29 percent, at 12,010.72. The Standard & Poor's 500 Index was down 2.25 points, or 0.18 percent, at 1,244.71. The Nasdaq Composite Index was down 3.11 points, or 0.12 percent, at 2,617.23.
The day before the Dow Jones industrial average had its best day since March 2009.
In the foreign exchange market, the euro was last up 0.4 percent at $1.34995.
"While the rising interest rates that euro zone governments are forced to pay are widely acknowledged as unsustainable, the fact that market demand was strong has, for now, alleviated some concerns about government funding issues," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Spain sold a maximum target of 3.75 billion euros of bonds and saw some significantly improved bid/cover ratios compared with previous actions after its yields in the secondary market moved away from record highs in the past week.
Its borrowing costs at the auction were still the highest in 14 years.
Polish Finance Minister Jacek Rostowski, whose country holds the rotating European Union presidency, said on Wednesday EU finance ministers expect the European Central Bank to step in forcefully to calm bond markets if leaders agree to move towards fiscal union then.
US government debt prices fell. Benchmark 10-year Treasury notes were down 16/32 in price, with the yield at 2.09 percent.
In the oil market, Brent crude was down as Goldman Sachs warned of a possible sharp drop in demand on increasing signs of economic slowdown in Europe. Brent crude fell $1.85 to $108.67 a barrel.
Gold rose to a session peak of $1,754 per ounce before easing to $1,745.
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