Bristol-Myers rose 4.5 percent to $44.15 on its busiest day of trading since August, ahead of the release of the American Society of Clinical Oncology (ASCO) 2013 Annual Meeting abstracts Wednesday night. At one point the stock hit $45.59.

Hopes were high for the melanoma treatment, which combines the company’s Yervoy drug and an experimental treatment known as Nivolumab, part of a closely watched class of new therapies that harness the immune system to fight cancer known as PD-1 blockers.

More than 29 million shares of the stock changed hands on Wednesday and the options market was active, with overall volume more than nine times the daily average, according to options analytics firm Trade Alert.

The ASCO abstracts will be released from embargo at 6 p.m. EDT (2200 GMT)

Traders appear to be snapping up calls, establishing near-term bullish positions on the stock to position for further gains in the share price, according to Interactive Brokers Group options analyst Caitlin Duffy.

Most of the action is focused on front month May and June calls with intraday volume call volume exceeding open interest across several strike prices, Duffy said. Overall option volume on BMY is 9.5 times the daily average with 69,000 calls and 46,000 puts traded late on Wednesday, according to Trade Alert.

Call options give the buyer the right to purchase a stock at a given price by a certain date and are often used to express a bullish outlook. The May $45 strike calls were particularly active, with many bought for an average premium of 54 cents each, making them profitable if the stock settles above $45.54 by expiration at the end of this week.

The ASCO annual meeting begins on May 31 in Chicago.

(Reporting By Doris Frankel and Julie Steenhuysen in Chicago; Editing by Nick Zieminski)

They face a sobering checklist:

The U.S. economy remains shackled by a mountain of household debt and continues to whipsaw between periods of modest growth and next to none at all.

The euro zone is mired in recession, lurching from crisis to crisis and now dealing with the latest trouble spot in Cyprus.

And even such star performers as China and Brazil have run low on gas. China in 2012 posted its weakest year of growth since 1999. Brazil’s economy slowed to a near standstill; at the same time, it faces a growing threat from inflation.

Against this backdrop, the exasperation of finance ministers and central bankers attending last week’s Group of 20 and International Monetary Fund meetings was palpable. The official communiques and sideline discussions reflected their frustration over the failure so far to deliver an effective mix of policies to finally get an upper hand on a long-lasting crisis that shows little sign of ending.

“We cannot unmistakably declare that the worst is behind us,” Brazilian Finance Minister Guido Mantega said on Friday. “There is a risk of a prolonged crisis, despite all our efforts in the G20 and other international forums.”

Central banks across the developed world have held interest rates at rock-bottom levels since 2008 while pumping more than $6 trillion into their banking systems through loans and asset-purchase operations known as quantitative easing, or “QE.” The European Central Bank has helped lower borrowing costs for the governments of Spain and Italy. Ireland, Portugal and Greece have been bailed out.

And yet a return to normalcy appears a distant dream.

The IMF last week ratcheted back its projections for world economic growth in 2013. Rich nations face a third consecutive year of growth below 2 percent, with U.S. GDP seen growing just 1.9 percent.

The IMF projects Japan’s economy will be so weak consumers will bid prices just 0.1 percent higher this year, while China is seen accelerating only marginally to an 8 percent rate. Weakened demand has fueled a plunge in commodities including copper, which will hurt the economies of Latin America.

At the meetings of top finance officials in Washington, frustrations were especially evident regarding the euro zone, which is beset by a debt crisis. The IMF expects the euro zone economy to contract for a second consecutive year.

“Unless Europe gets its act together and unless the green shoots that we see in the U.S. actually flower and become solid plants, and unless Japan does the near impossible task of reflating its economy and having inflation of 2 percent – how is it that developing and emerging market economies can achieve high growth?” Indian Finance Minister P. Chidambaram said at an event on the sidelines of the meetings.

WARILY WELCOMING JAPAN’S STIMULUS

The desire for a stronger path of growth helps explain why officials, even those in emerging markets, have had a sanguine response to Japan’s new plans to stimulate its economy with $1.4 trillion in bond-buying by the country’s central bank.

Mantega pointed out that unemployment remains high in large advanced economies and that more fiscal stimulus may be needed, an elixir that has been resisted in some quarters, particularly in the euro zone. He also noted that emerging markets are “inevitably affected” by tepid demand in the United States, Japan and elsewhere, as they have been unable to sustain the kind of growth rates seen in years past.

Still, it was clear officials worried advanced countries were becoming overly dependant on ultra-easy monetary policies that have become less effective over time. Years of low interest rates could even plant the seeds for the next crisis.

“Even though some advanced economies did several rounds of QEs, nothing changed,” a South Korean G20 official told Reuters.

Part of the climate of frustration in global policymaking circles results from the fact the that the global economy is more interconnected in terms of finance and trade than it was a few decades ago, making it more difficult to adopt policies that help one country without hurting others.

Before the 2007-2009 financial crisis, a handful of advanced nations dominated international economic policymaking. Now the G20, which includes rich and poor countries as well as the European Union, is the principal venue for steering the global economy.

Poor nations worry that rich nations’ monetary stimulus will destabilize their economies by flooding them with capital, fueling inflation or asset bubbles. Money printing by the United States, Europe and Japan also subtracts value from the currencies of the rich world, helping its exporters at the expense of factories in countries like Brazil.

This breeds tension in a large forum like the G20, where a variety of contrasting voices compete to shape consensus.

“You’re not going to have a perfectly optimal set of policies for everyone in the world,” said Tharman Shanmugaratnam, chairman of the International Monetary and Financial Committee, which advises the IMF on the global monetary and financial system.

Tharman said the trick was to find a mix of policies that would help economies grow without risking future bubbles. “We need a new framework,” he said. (Additional reporting By Paul Eckert; Editing by Theodore d’Afflisio)

They face a sobering checklist:

The U.S. economy remains shackled by a mountain of household debt and continues to whipsaw between periods of modest growth and next to none at all.

The euro zone is mired in recession, lurching from crisis to crisis and now dealing with the latest trouble spot in Cyprus.

And even such star performers as China and Brazil have run low on gas. China in 2012 posted its weakest year of growth since 1999. Brazil’s economy slowed to a near standstill; at the same time, it faces a growing threat from inflation.

Against this backdrop, the exasperation of finance ministers and central bankers attending last week’s Group of 20 and International Monetary Fund meetings was palpable. The official communiques and sideline discussions reflected their frustration over the failure so far to deliver an effective mix of policies to finally get an upper hand on a long-lasting crisis that shows little sign of ending.

“We cannot unmistakably declare that the worst is behind us,” Brazilian Finance Minister Guido Mantega said on Friday. “There is a risk of a prolonged crisis, despite all our efforts in the G20 and other international forums.”

Central banks across the developed world have held interest rates at rock-bottom levels since 2008 while pumping more than $6 trillion into their banking systems through loans and asset-purchase operations known as quantitative easing, or “QE.” The European Central Bank has helped lower borrowing costs for the governments of Spain and Italy. Ireland, Portugal and Greece have been bailed out.

And yet a return to normalcy appears a distant dream.

The IMF last week ratcheted back its projections for world economic growth in 2013. Rich nations face a third consecutive year of growth below 2 percent, with U.S. GDP seen growing just 1.9 percent.

The IMF projects Japan’s economy will be so weak consumers will bid prices just 0.1 percent higher this year, while China is seen accelerating only marginally to an 8 percent rate. Weakened demand has fueled a plunge in commodities including copper, which will hurt the economies of Latin America.

At the meetings of top finance officials in Washington, frustrations were especially evident regarding the euro zone, which is beset by a debt crisis. The IMF expects the euro zone economy to contract for a second consecutive year.

“Unless Europe gets its act together and unless the green shoots that we see in the U.S. actually flower and become solid plants, and unless Japan does the near impossible task of reflating its economy and having inflation of 2 percent – how is it that developing and emerging market economies can achieve high growth?” Indian Finance Minister P. Chidambaram said at an event on the sidelines of the meetings.

WARILY WELCOMING JAPAN’S STIMULUS

The desire for a stronger path of growth helps explain why officials, even those in emerging markets, have had a sanguine response to Japan’s new plans to stimulate its economy with $1.4 trillion in bond-buying by the country’s central bank.

Mantega pointed out that unemployment remains high in large advanced economies and that more fiscal stimulus may be needed, an elixir that has been resisted in some quarters, particularly in the euro zone. He also noted that emerging markets are “inevitably affected” by tepid demand in the United States, Japan and elsewhere, as they have been unable to sustain the kind of growth rates seen in years past.

Still, it was clear officials worried advanced countries were becoming overly dependent on ultra-easy monetary policies that have become less effective over time. Years of low interest rates could even plant the seeds for the next crisis.

“Even though some advanced economies did several rounds of QEs, nothing changed,” a South Korean G20 official told Reuters.

Part of the climate of frustration in global policymaking circles results from the fact the that the global economy is more interconnected in terms of finance and trade than it was a few decades ago, making it more difficult to adopt policies that help one country without hurting others.

Before the 2007-2009 financial crisis, a handful of advanced nations dominated international economic policymaking. Now the G20, which includes rich and poor countries as well as the European Union, is the principal venue for steering the global economy.

Poor nations worry that rich nations’ monetary stimulus will destabilize their economies by flooding them with capital, fueling inflation or asset bubbles. Money printing by the United States, Europe and Japan also subtracts value from the currencies of the rich world, helping its exporters at the expense of factories in countries like Brazil.

This breeds tension in a large forum like the G20, where a variety of contrasting voices compete to shape consensus.

“You’re not going to have a perfectly optimal set of policies for everyone in the world,” said Tharman Shanmugaratnam, chairman of the International Monetary and Financial Committee, which advises the IMF on the global monetary and financial system.

Tharman said the trick was to find a mix of policies that would help economies grow without risking future bubbles. “We need a new framework,” he said.

(Additional reporting By Paul Eckert; Editing by Theodore d’Afflisio)

They face a sobering checklist:

The U.S. economy remains shackled by a mountain of household
debt and continues to whipsaw between periods of modest growth
and next to none at all.

The euro zone is mired in recession, lurching from crisis to
crisis and now dealing with the latest trouble spot in Cyprus.

And even such star performers as China and Brazil have run
low on gas. China in 2012 posted its weakest year of growth
since 1999. Brazil’s economy slowed to a near standstill; at the
same time, it faces a growing threat from inflation.

Against this backdrop, the exasperation of finance ministers
and central bankers attending last week’s Group of 20 and
International Monetary Fund meetings was palpable. The official
communiques and sideline discussions reflected their frustration
over the failure so far to deliver an effective mix of policies
to finally get an upper hand on a long-lasting crisis that shows
little sign of ending.

“We cannot unmistakably declare that the worst is behind
us,” Brazilian Finance Minister Guido Mantega said on Friday.
“There is a risk of a prolonged crisis, despite all our efforts
in the G20 and other international forums.”

Central banks across the developed world have held interest
rates at rock-bottom levels since 2008 while pumping more than
$6 trillion into their banking systems through loans and
asset-purchase operations known as quantitative easing, or “QE.”
The European Central Bank has helped lower borrowing costs for
the governments of Spain and Italy. Ireland, Portugal and Greece
have been bailed out.

And yet a return to normalcy appears a distant dream.

The IMF last week ratcheted back its projections for world
economic growth in 2013. Rich nations face a third consecutive
year of growth below 2 percent, with U.S. GDP seen growing just
1.9 percent.

The IMF projects Japan’s economy will be so weak consumers
will bid prices just 0.1 percent higher this year, while China
is seen accelerating only marginally to an 8 percent rate.
Weakened demand has fueled a plunge in commodities including
copper, which will hurt the economies of Latin America.

At the meetings of top finance officials in Washington,
frustrations were especially evident regarding the euro zone,
which is beset by a debt crisis. The IMF expects the euro zone
economy to contract for a second consecutive year.

“Unless Europe gets its act together and unless the green
shoots that we see in the U.S. actually flower and become solid
plants, and unless Japan does the near impossible task of
reflating its economy and having inflation of 2 percent – how is
it that developing and emerging market economies can achieve
high growth?” Indian Finance Minister P. Chidambaram said at an
event on the sidelines of the meetings.

WARILY WELCOMING JAPAN’S STIMULUS

The desire for a stronger path of growth helps explain why
officials, even those in emerging markets, have had a sanguine
response to Japan’s new plans to stimulate its economy with $1.4
trillion in bond-buying by the country’s central bank.

Mantega pointed out that unemployment remains high in large
advanced economies and that more fiscal stimulus may be needed,
an elixir that has been resisted in some quarters, particularly
in the euro zone. He also noted that emerging markets are
“inevitably affected” by tepid demand in the United States,
Japan and elsewhere, as they have been unable to sustain the
kind of growth rates seen in years past.

Still, it was clear officials worried advanced countries
were becoming overly dependant on ultra-easy monetary policies
that have become less effective over time. Years of low interest
rates could even plant the seeds for the next crisis.

“Even though some advanced economies did several rounds of
QEs, nothing changed,” a South Korean G20 official told Reuters.

Part of the climate of frustration in global policymaking
circles results from the fact the that the global economy is
more interconnected in terms of finance and trade than it was a
few decades ago, making it more difficult to adopt policies that
help one country without hurting others.

Before the 2007-2009 financial crisis, a handful of advanced
nations dominated international economic policymaking. Now the
G20, which includes rich and poor countries as well as the
European Union, is the principal venue for steering the global
economy.

Poor nations worry that rich nations’ monetary stimulus will
destabilize their economies by flooding them with capital,
fueling inflation or asset bubbles. Money printing by the United
States, Europe and Japan also subtracts value from the
currencies of the rich world, helping its exporters at the
expense of factories in countries like Brazil.

This breeds tension in a large forum like the G20, where a
variety of contrasting voices compete to shape consensus.

“You’re not going to have a perfectly optimal set of
policies for everyone in the world,” said Tharman
Shanmugaratnam, chairman of the International Monetary and
Financial Committee, which advises the IMF on the global
monetary and financial system.

Tharman said the trick was to find a mix of policies that
would help economies grow without risking future bubbles. “We
need a new framework,” he said.

(Additional reporting By Paul Eckert; Editing by Theodore
d’Afflisio)

They were also poised to demand swifter resolution to
setting guidelines for financial benchmarks like the Libor
interest rate in the wake of a global rate-rigging scandal.

But a rethinking of the austerity push among the world’s
biggest economies loomed as the biggest talking point. Advanced
economies, particularly in Europe, have undertaken sharp
austerity drives in recent years to curb growing debt, but those
efforts have at times damaged economies already suffering from
capital flight and under-investment from the private sector.

EU Economic and Monetary Affairs Commissioner Olli Rehn told
Reuters in an interview on Thursday that a period of reduced
spending and borrowing was necessary to calm markets concerned
about out-of-control debt levels, particularly in peripheral
European countries. That time has passed, he said.

“Decisive action was taken. Now as we have restored the
credibility in the short-term, that gives us the possibility of
having a smoother path of fiscal adjustment in the medium-term,”
he said.

The United States has opposed committing to any targeted
level of public debt as a percentage of GDP, a common way to
measure a nation’s debt burden.

“I think an issue that will come up … is the issue of hard
targets, or not, for debt-to-GDP,” Canadian Finance Minister Jim
Flaherty told reporters on Thursday.

In a 2010 study frequently cited by policymakers, Harvard
professors Kenneth Rogoff and Carmen Reinhart found that on
average, economies contract when the debt-to-GDP ratio surpasses
90 percent – a level G20 officials were set to debate.

However, the study’s results were disputed by researchers at
the University of Massachusetts at Amherst, who said growth for
countries with those ratios was actually 2.2 percent.

Weakness in economies that undertook the most severe
measures to cut deficits undercut the austerity argument. The
United Kingdom, in particular, is suffering its third recession
in the last five years.

Still, Flaherty urged the G20 to set hard targets on debt
and deficit, though he added that troubled economies should move
more slowly towards balanced budgets than others.

“It’s important for confidence by investors, which leads to
more investment, economic growth and jobs,” Flaherty said.

SPILLOVER CONCERNS

The unprecedented level of monetary stimulus designed to
reinvigorate struggling large economies, including the United
States, the euro zone and Japan, has raised concerns about
excessive capital flight to developing nations.

In a communique on Thursday, the Group of 24 developing
nations, whose ranks include Brazil, India, South Africa and
Mexico, called on the advanced economies to “take into account
the negative spillover effects … of prolonged unconventional
monetary policies including on inflation and the volatility of
capital flows and commodity prices.”

The Bank of Japan is attempting to end decades of stagnation
by pumping $1.4 trillion into its economy, some of which is
expected to find its way into emerging markets. Local currency
funds have pulled in $16.7 billion in the first quarter of 2013
worldwide, the most in more than two years, according to Lipper,
a unit of Thomson Reuters.

“There is a call from the G24 members to have clear
coordination and better communication between advanced economies
and emerging markets … towards using coordination as a way to
mitigate these potential asset appreciation bubbles. The
consensus is that this is something that has to be closely
monitored,” said Mexican Finance Minister Luis Videgaray.

Videgaray has cause for concern.

In the days following the Bank of Japan’s announcement, for
example, the Mexican peso jumped 2.5 percent against the dollar
to its strongest in 20 months. Against the yen, the
peso surged over 9 percent.

Bank of Japan Governor Haruhiko Kuroda, in response to
questioning about the country’s aggressive efforts, said he
didn’t see signs of asset price bubbles “brewing in emerging
nations” as a result of monetary stimulus.

“It’s true that the massive monetary stimulus of advanced
economies may affect emerging economies including through
capital inflows,” he said. “Such spill-over effects had been
discussed even before the G20 meeting, and will likely be on the
agenda at (this week’s) meeting too.”

The G20 finance ministers are due to release their formal
communique around midday on Friday. They plan to task the
Financial Stability Board, a coordinating body of global
financial regulators, with overseeing the reform of financial
benchmarks such as Libor, two sources familiar with the
situation told Reuters on Thursday.

An early draft of a communique G20 financial officials will
be debating asks the FSB to take on the role after a global
interest rate-rigging scandal that involved some of the world’s
largest banks.

The International Organization of Securities Commissions
came out with a report this week saying that financial
benchmarks should be based on actual transactions rather than
estimates, such as is the case with Libor.

A study by eminent Harvard economists Carmen Reinhart and
Kenneth Rogoff first presented in 2008 said a country’s gross
domestic product growth begins to slow once its debt-to-GDP
ratio reaches at least 90 percent. The research has been cited
by officials in the United States, the European Union and
elsewhere as justification for tackling deficits.

But researchers at the University of Massachusetts at
Amherst, in a new study, say that the average real growth rate
for countries with a public debt to GDP ratio of more than 90
percent “is actually 2.2 percent, not minus 0.1 percent as
published in Reinhart and Rogoff.”

“Coding errors, selective exclusion of available data, and
unconventional weighting of summary statistics lead to serious
errors that inaccurately represent the relationship between
public debt and GDP growth among 20 advanced economies in the
post-war period,” wrote the authors, Thomas Herndon, Michael Ash
and Robert Pollin.

Reinhart and Rogoff, who said they had only just received
the study, defended their original findings.

“Of course much further research is needed as the data we
developed and is being used in these studies is new,” they said
in a joint response by email. “Nevertheless, the weight of the
evidence to date – including this latest comment – seems
entirely consistent with our original interpretation of the
data.”

Pollin told Reuters that the purpose of their work was not
to prove that public debt levels did not matter. Rather it was
to counter the idea that there was some sort of general rule -
the Reinhart-Rogoff 90 percent threshold – “and once you go over
that, you go over the abyss,” he said.

Reinhart and Rogoff’s work was influential in the austerity
debate in recent years, as some governments that saw growth slow
and debt rise responded with spending reductions and higher
taxes, which in some cases, such as the United Kingdom, have
worsened demand.

U.S. Senator John Cornyn, a fiscally conservative
Republican, cited the Reinhart and Rogoff finding as he
questioned Treasury Secretary Jack Lew at a hearing last week
about the impact of the large U.S. deficit on economic growth.

And financial leaders of the world’s 20 biggest economies
said they will consider at a meeting later this week a proposal
to cut their public debt over the longer term to well below 90
percent of gross domestic product, according to a document
prepared for the meeting obtained by Reuters.

In February, European Commissioner Olli Rehn expressed his
concern with high debt levels in the European Union, referencing
“serious academic research” that points to the 90 percent
threshold that causes slow growth.

Former U.S. vice presidential candidate Paul Ryan,
Republican congressman from Wisconsin, has cited these
statistics in the past. He said in a statement before the House
Committee on the Budget in June 2011 that “economists who have
studied sovereign debt tell us that letting total debt rise
above 90 percent of GDP creates a drag on economic growth.”

A study by eminent Harvard economists Carmen Reinhart and Kenneth Rogoff first presented in 2008 said a country’s gross domestic product growth begins to slow once its debt-to-GDP ratio reaches at least 90 percent.

But researchers at the University of Massachusetts at Amherst, in a new study, say that the average real growth rate for countries with a public debt to GDP ratio of more than 90 percent “is actually 2.2 percent, not minus 0.1 percent as published in Reinhart and Rogoff.”

“Coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period,” wrote the authors, Thomas Herndon, Michael Ash and Robert Pollin.

Pollin told Reuters that the purpose of their work was not to prove that public debt levels did not matter. Rather it was to counter the idea that there was some sort of general rule – the Reinhart-Rogoff 90 percent threshold – “and once you go over that, you go over the abyss,” he said.

Reinhart and Rogoff’s work was influential in the austerity debate in recent years, as some governments that saw growth slow and debt rise responded with spending reductions and higher taxes, which in some cases, such as the United Kingdom, have worsened demand.

Reinhart and Rogoff, who said they had only just received the study, defended their original findings.

“Of course much further research is needed as the data we developed and is being used in these studies is new,” they said in a joint response by email. “Nevertheless, the weight of the evidence to date – including this latest comment – seems entirely consistent with our original interpretation of the data.”

U.S. Senator John Cornyn, a fiscally conservative Republican, cited the Reinhart and Rogoff finding as he questioned Treasury Secretary Jack Lew at a hearing last week about the impact of the large U.S. deficit on economic growth.

And financial leaders of the world’s 20 biggest economies said they will consider at a meeting later this week a proposal to cut their public debt over the longer term to well below 90 percent of gross domestic product, according to a document prepared for the meeting obtained by Reuters.

(Additional reporting by Alister Bull in Washington; Editing by James Dalgleish)

World stock markets edged higher, led by European shares. The S&P 500 index held near multi-year highs as investors looked ahead to President Barack Obama’s State of the Union address On Tuesday evening.

The G7, in a statement, urged countries to refrain from competitive devaluations, saying it remained committed to “market-determined” exchange rates. This was in reaction to weeks of concern that the new Japanese government’s monetary easing policy, which has also weakened the yen, could trigger far-reaching currency wars.

However, the market interpreted the statement as a sign that the G7 supported Japan’s moves, prompting an official from a G7 nation to say later that the group “is concerned about unilateral guidance on the yen.”

The comments – meant to clarify the G7 statement – sparked a rally in the yen against the dollar and euro.

“Having asserted on Sunday evening that G20 would seek to ‘calm’ markets over talk of currency wars, the first ad-hoc attempt to do so this morning has been a dismal failure,” said Richard Gilhooly, analyst at TD Securities in New York. “Rather than calm the markets, the poorly communicated statement has significantly raised volatility and now we have to wait to see the actual outcome of G20 on the weekend.”

The dollar was down 0.8 percent against the yen at 93.51, having risen to 94.42 yen on Monday, according to Reuters data, the highest since May, 2010.

The euro fell 0.5 percent to 125.77 yen, after a 2 percent rally on Monday.

The G7 must go into this weekend’s G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday.

Tokyo is likely to come under serious pressure when G20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is employing similar policies.

Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo’s policy steps were not “aimed at influencing currency markets.”

U.S. Treasury official Lael Brainard said on Monday that while competitive devaluations should be avoided, Washington supported Tokyo’s efforts to reinvigorate growth and end deflation.

MSCI’s global share index was up 0.5 percent at 356.40. European shares gained 0.6 percent to close at 1161.46, led by UK banks after Britain’s third-biggest lender, Barclays (BARC.L: Quote, Profile, Research), unveiled cost cuts and a strategic overhaul.

Housing stocks led Wall Street higher. The Dow Jones industrial average gained 57.74 points, or 0.41 percent, at 14,028.98. The Standard & Poor’s 500 Index was up 3.21 points, or 0.21 percent, at 1,520.22. The Nasdaq Composite Index was down 2.58 points, or 0.08 percent, at 3,189.42.

STATE OF THE UNION

The economy will be a major topic of Obama’s speech before a joint session of Congress set for 9 p.m. (0200 GMT Wednesday). Investors will listen for any clues about a deal with Republicans to avert automatic spending cuts due to take effect March 1.

Benchmark 10-year Treasury notes fell 5/32 in price to yield 1.98 percent, up from 1.96 percent late on Monday, as investors prepared to absorb $72 billion in new debt supply this week.

In European bond markets, Spanish and Italian bonds inched up as domestic buyers took advantage of a recent sell-off. But the recovery looked fragile, given political uncertainty in both countries.

The euro rose 0.3 percent to $1.3447, accelerating gains after European Central Bank President Mario Draghi said there is no such thing as a currency war and that Spain was on the right track toward economic recovery.

Oil prices rose as OPEC said world oil demand will grow more quickly than previously thought this year. Brent oil rose 18 cents to $118.31 a barrel and U.S. crude was up 48 cents to settle at $97.51 a barrel.

Spot gold clawed back from its lowest in over a month and was last at $1,651 an ounce.

Financial markets showed a muted reaction to news that North Korea conducted a nuclear test and said it would never bow to U.N. resolutions.

(Editing by Nick Zieminski and Dan Grebler)

World stock markets edged higher, led by European shares. U.S. indexes were little changed, with the S&P 500 index holding near multi-year highs ahead of President Barack Obama’s State of the Union address.

The G7, in a statement, urged countries to refrain from competitive devaluations, saying it remained committed to “market-determined” exchange rates. This was in reaction to weeks of concern that the new Japanese government’s monetary easing policy, which has also weakened the yen, could trigger far-reaching currency wars.

However, the market interpreted the statement as a sign that the G7 supported Japan’s moves, prompting an official from a G7 nation to say later that the group “is concerned about unilateral guidance on the yen.”

The comments – meant to clarify the G7 statement – sparked a rally in the yen against the dollar and euro.

“Having asserted on Sunday evening that G20 would seek to ‘calm’ markets over talk of currency wars, the first ad-hoc attempt to do so this morning has been a dismal failure,” said Richard Gilhooly, analyst at TD Securities in New York. “Rather than calm the markets, the poorly communicated statement has significantly raised volatility and now we have to wait to see the actual outcome of G20 on the weekend.”

The dollar was down 1.2 percent against the yen at 93.14, having risen to 94.42 yen on Monday, according to Reuters data, the highest since May, 2010.

The euro fell 0.9 percent to 125.30, after a 2 percent rally on Monday.

The G7 must go into this weekend’s G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday.

Tokyo is likely to come under serious pressure when G20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is employing similar policies.

Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo’s policy steps were not “aimed at influencing currency markets.”

U.S. Treasury official Lael Brainard said on Monday that while competitive devaluations should be avoided, Washington supported Tokyo’s efforts to reinvigorate growth and end deflation.

MSCI’s global share index was up 0.5 percent at 356.55. European shares gained 0.6 percent to close at 1161.46, led by UK banks after Britain’s third-biggest lender, Barclays (BARC.L: Quote, Profile, Research), unveiled cost cuts and a strategic overhaul.

On Wall Street, the Dow Jones industrial average gained 45.05 points, or 0.32 percent, at 14,016.29. The Standard & Poor’s 500 Index was up 3.21 points, or 0.21 percent, at 1,520.22. The Nasdaq Composite Index was up 0.77 points, or 0.02 percent, at 3,192.77.

STATE OF THE UNION

The economy will be a major topic of Obama’s speech before a joint session of Congress set for 9 p.m. (0200 GMT Wednesday). Investors will listen for any clues on a deal with Republicans to avert automatic spending cuts due to take effect March 1.

Benchmark 10-year Treasury notes fell 2/32 in price to yield 1.97 percent, up from 1.96 percent late on Monday, as investors prepared to absorb $72 billion in new debt supply this week.

In European bond markets, Spanish and Italian bonds inched up as domestic buyers took advantage of a recent sell-off. But the recovery looked fragile, given political uncertainty in both countries.

Spain sold 5.6 billion euros of 6- and 12-month debt, beating the top end of the target amount, but paid a higher yield on the longer-term paper as a political corruption scandal weighed on shaky confidence. Italy’s debt costs also rose as it sold 8.5 billion euros of one-year paper.

The euro rose 0.4 percent to $1.3462, accelerating gains after European Central Bank President Mario Draghi said there is no such thing as a currency war and that Spain was on the right track toward economic recovery.

Brent oil rose 14 cents to $118.27 a barrel. Spot gold clawed back from its lowest in over a month and was last at $1,652 an ounce.

Financial markets showed a muted reaction to news that North Korea has conducted a nuclear test and said it would never bow to U.N. resolutions.

A nuclear test monitoring agency in Vienna said the blast was double the size of North Korea’s last test in 2009. NATO condemned the move, calling it an “irresponsible act” that posed a grave threat to world peace.

(Editing by Dan Grebler)

World stock markets edged higher, led by European shares. U.S. indexes were little changed, with the S&P 500 index holding near multi-year highs ahead of President Barack Obama’s State of the Union address.

The G7, in a statement, urged countries to refrain from competitive devaluations, saying it remained committed to “market-determined” exchange rates. This was in reaction to weeks of concern that the new Japanese government’s monetary easing policy, which has also weakened the yen, could trigger far-reaching currency wars.

However, the market interpreted the statement as a sign that the G7 supported Japan’s moves, prompting an official from a G7 nation to say later that the group “is concerned about unilateral guidance on the yen.”

The comments – meant to clarify the G7 statement – sparked a rally in the yen against the dollar and euro.

“Having asserted on Sunday evening that G20 would seek to ‘calm’ markets over talk of currency wars, the first ad-hoc attempt to do so this morning has been a dismal failure,” said Richard Gilhooly, analyst at TD Securities in New York. “Rather than calm the markets, the poorly communicated statement has significantly raised volatility and now we have to wait to see the actual outcome of G20 on the weekend.”

The dollar was down 1.2 percent against the yen at 93.14, having risen to 94.42 yen on Monday, according to Reuters data, the highest since May, 2010.

The euro fell 0.9 percent to 125.30, after a 2 percent rally on Monday.

The G7 must go into this weekend’s G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday.

Tokyo is likely to come under serious pressure when G20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is employing similar policies.

Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo’s policy steps were not “aimed at influencing currency markets.”

U.S. Treasury official Lael Brainard said on Monday that while competitive devaluations should be avoided, Washington supported Tokyo’s efforts to reinvigorate growth and end deflation.

MSCI’s global share index was up 0.5 percent at 356.55. European shares gained 0.6 percent to close at 1161.46, led by UK banks after Britain’s third-biggest lender, Barclays, unveiled cost cuts and a strategic overhaul.

On Wall Street, the Dow Jones industrial average gained 45.05 points, or 0.32 percent, at 14,016.29. The Standard & Poor’s 500 Index was up 3.21 points, or 0.21 percent, at 1,520.22. The Nasdaq Composite Index was up 0.77 points, or 0.02 percent, at 3,192.77.

STATE OF THE UNION

The economy will be a major topic of Obama’s speech before a joint session of Congress set for 9 p.m. (0200 GMT Wednesday). Investors will listen for any clues on a deal with Republicans to avert automatic spending cuts due to take effect March 1.

Benchmark 10-year Treasury notes fell 2/32 in price to yield 1.97 percent, up from 1.96 percent late on Monday, as investors prepared to absorb $72 billion in new debt supply this week.

In European bond markets, Spanish and Italian bonds inched up as domestic buyers took advantage of a recent sell-off. But the recovery looked fragile, given political uncertainty in both countries.

Spain sold 5.6 billion euros of 6- and 12-month debt, beating the top end of the target amount, but paid a higher yield on the longer-term paper as a political corruption scandal weighed on shaky confidence. Italy’s debt costs also rose as it sold 8.5 billion euros of one-year paper.

The euro rose 0.4 percent to $1.3462, accelerating gains after European Central Bank President Mario Draghi said there is no such thing as a currency war and that Spain was on the right track toward economic recovery.

Brent oil rose 14 cents to $118.27 a barrel. Spot gold clawed back from its lowest in over a month and was last at $1,652 an ounce.

Financial markets showed a muted reaction to news that North Korea has conducted a nuclear test and said it would never bow to U.N. resolutions.

A nuclear test monitoring agency in Vienna said the blast was double the size of North Korea’s last test in 2009. NATO condemned the move, calling it an “irresponsible act” that posed a grave threat to world peace.

(Editing by Dan Grebler)