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Tuesday, November 8, 2011

US Stocks fight Italian jitters to close higher (ext)

NEW YORK (CNNMoney) -- Stocks climbed higher in the final hour of trading after a choppy day. Investors have shifted their focus to Italy, as it appears Greece is finally getting its house in order.

Published reports said that a European Central Bank official said the sovereign debt crisis could be resolved in the next two years.

Borrowing costs in Italy skyrocketed Monday, with the yield on the 10-year note hitting a record high of 6.68% at one point, before easing to settle at 6.66%. Over the weekend, tens of thousands took to the streets in Rome to protest Italian Prime Minister Silvio Berlusconi's reforms.

"Italy doesn't have a very good track record in handling fiscal contraction," said Pranay Gupta, chief investment officer of ING Investment Management Asia, in an interview with CNNi. "This time they have made promises and I think that they've had a lot of intervention in Italy to make sure they stick to their promises is key

The Dow Jones industrial average (INDU) gained 85 points, or 0.7% for the day. The S&P 500 (SPX) added 8 points, or 0.6%. The Nasdaq (COMP) moved up 9 points, or 0.3%.

Investor fears have been driven by the European debt crisis for months, and hasn't helped that the Group of 20 summit in Cannes, France, last week failed to produce any tangible new solutions.

With Greece now on the right track, investors are keenly watching developments in Italy.

"The big elephant in the room actually is Italy," said Gupta. "Greece they can bail out, they can contain, but Italy cannot be refinanced. And it has $300 billion of debt to refinance next year. So the real question is if they are not able to do that, then you have a severe global crisis."

The dollar rose against the euro, but fell versus the British pound and the Japanese yen.

Oil for December delivery edged $1.26 cents to $95.52 a barrel.

Gold futures for December delivery added $35.00 to $1791.10 an ounce.

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