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Euro up on ECB hopes; hurricane jitters lift oil

NEW YORK (Reuters) – The euro rose against the U.S. dollar on Tuesday on bets the European Central Bank will soon act to tackle the bloc’s debt crisis, while U.S. crude oil prices rallied as Hurricane Isaac approached the Gulf Coast.

Stocks were little changed on Wall Street as mixed data gave investors little indication whether Federal Reserve Chairman Ben Bernanke might signal more economic stimulus from the Fed when he speaks on Friday. Trading was very light, the third-lowest volume for a full session so far this year.

U.S. crude prices settled 0.9 percent higher as Hurricane Isaac made its way through the Gulf of Mexico, forcing companies to close down oil rigs and refineries.

Investors were looking ahead to Bernanke’s speech on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming, where clues on more stimulus could translate into a weaker U.S. dollar.

The European Central Bank said its president, Mario Draghi, will not attend the conference due to a heavy workload, news that gave further support to the euro.

Draghi’s absence is seen as a hint that “he will be busy finalizing the details of policy proposals to be unveiled in the coming weeks,” according to Nick Bennenbroek, head of currency strategy at Wells Fargo Bank. The ECB will meet on September 6.

The single currency rose 0.55 percent to $1.2568.

Upbeat U.S. housing data made it harder for investors to determine if the Fed will announce further stimulus to the U.S. economy, a bet that has supported a recent rally in equities and other risk assets.

“Looks like we are taking a wait-and-see on Bernanke,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

He said a handful of global economic indicators were mixed, leaving room for the Fed to pump more money into the economy.

“Unfortunately a fair amount of stimulus is probably priced in so we are at a period now where bad news is good news until we hear what (Bernanke) is actually going to do,” said Ablin.

The Dow Jones industrial average fell 21.68 points, or 0.17 percent, to 13,102.99. The SP 500 Index dipped 1.14 points, or 0.08 percent, to 1,409.30. The Nasdaq Composite Index rose 3.95 points, or 0.13 percent, to 3,077.14.

An MSCI gauge of global equities fell 0.2 percent and the pan-European FTSEurofirst 300 index closed down 0.7 percent. U.S. dollar-denominated Nikkei futures fell 0.55 percent.

Global growth worries resurfaced after Japan cut its assessment for the economy, citing slow-downs in the United States and China as well as Europe’s debt crisis.

Adding to signs of weakness, Spain said its recession had deepened in the second quarter as domestic spending slumped in the wake of tough austerity measures aimed at tackling the government’s fiscal problems.

U.S. Treasuries prices edged up as traders anticipated hints from Bernanke of further economic stimulus, possibly in the form of more bond purchases.

The benchmark 10-year U.S. Treasury note was up 5/32, the yield at 1.6352 percent.

(Writing by Rodrigo Campos, additional reporting by Chuck Mikolajczak, Wanfeng Zhou and Richard Leong; editing by Dan Grebler and Chizu Nomiyama)

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