Stocks see-sawed in NY trading, closing mostly flat on the day, and major currencies largely followed suit. EUR/USD initially sold-off from the 1.2300 level down to just above 1.2250, but then bounced sharply on what appeared to be a short-squeeze, gaining ground all the way back to just below 1.2340. EUR/USD ended the day in the middle of that range around 1.2300. The Euro also gained support after concerns over Spain needing credit support from the EU/IMF were allayed by denials from European officials that Spain would not be on the EU Summit agenda. Officials also indicated that Spain was not expected to request financial assistance, but markets still expressed doubts, selling Spanish government bonds and sending 10 year yields up about 15 bps to their highest levels ever around 4.9%. Without any direction from stocks, JPY-crosses traded in a choppy range, with EUR/JPY fluctuating mostly between about 112.30/80 and finishing around 112.50. GBP came under more intense pressure against both the EUR and USD, where it dropped from highs near 1.4850 to close around 1.4730, after BP announced it was suspending its dividend for the next 3 quarters and agreed to set up a $20 bio escrow fund for spill-related claims. BOE Gov. added to the sterling selling by noting late in the NY afternoon that the pound’s 25% decline has aided the UK’s rebalancing efforts.

US data was mixed with housing data weaker than forecasts and industrial production a bit stronger. May US housing starts fell to 593K from 659K (exp. 648K) and building permits dropped from 610K to 574k (exp. 625K). May US industrial production beat estimates of +0.9%, coming in at +1.2%. Oil prices added to recent gains despite a larger than expected increase in weekly US oil inventory data, rising about $0.60 to $77.50/bbl. Gold prices mostly traded lower, but only gave up about $3 to end near $1230/oz.

The calendar in Asia is light, but Fed Chairman Bernanke will be speaking at a financial regulation conference just after the NY close. NZ will report June consumer confidence and Japan will release the final April Leading Index.