DJI- NEW YORK, Oct 11 (Reuters) - The euro made its first gain in four days on Thursday after the IMF said euro zone economies should have more time to cut budget deficits, while oil prices rose on escalating tensions between Syria and Turkey.
European and U.S. shares climbed after data showed further signs of improvement in the U.S. labor market, t hough Wall Street pared its gains to end the day little changed.
The data overshadowed a downgrade of Spain's credit rating by Standard & Poor's late on Wednesday.
In the currency market, the euro EUR= was the primary beneficiary of improved sentiment. It recovered from a more than one-week low, last trading at $1.2926, up 0.4 percent.
Christine Lagarde, the IMF's managing director, said she favored giving debt-burdened Greece and Spain more time to reduce their budget deficits because cutting too far and too fast would do more harm than good.
Lagarde's comments were seen supporting stability in the euro zone. One of the key debates to come from the euro zone's debt crisis is whether the steep cuts needed to get budgets in order come at the expense of economic growth.
Spanish bond yields turned lower, erasing an earlier spike to near the critical 6.0 percent mark seen as unsustainable after Standard & Poor's cut the country's credit rating.
S&P cut Spain's rating two notches to BBB-minus, one step from junk status, warning that an intensifying recession and poor response from euro zone policymakers to the crisis had left Spain highly vulnerable.
"Investors were initially spooked by the bad news from the euro zone, but soon realized that bad news is actually good news overall due to the fact that this now speeds up the timeline for Spain to request a bailout," said Neal Gilbert, market strategist at GFT in Grand Rapids, Michigan.
Ten-year Spanish yields ES10YT=TWEB were down 5.4 basis points on the day at 5.77 percent, having hit a session high at 5.96 percent earlier.
Markets expect Spain to be the first of the euro zone's "big four" economies to require a rescue package.
The benchmark 10-year U.S. Treasury note US10YT=RR rose 2/32 higher in price, yielding 1.673 percent.
Tensions in the Middle East pushed Brent crude LCOc1 up $1.38 to $115.71 a barrel, while U.S. crude futures settled up 82 cents at $92.07 per barrel CLc1. Maintenance curbs on North Sea output also pushed prices higher.
Turkish Prime Minister Tayyip Erdogan said a Syrian passenger plane forced to land in Ankara was carrying Russian-made munitions destined for Syria's defense ministry. Grounding of the plane was another sign of Ankara's growing assertiveness over the crisis in its war-torn neighbor.
"The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region," said Bjarne Schieldrop, analyst at SEB in Oslo.
Equities initially rose after news that claims for U.S. jobless benefits fell last week to the lowest in more than four and a half years.
Still, a drop in shares of Apple Inc AAPL.O helped Wall Street cut its gains in afternoon trading.
The Dow Jones industrial average .DJI fell 18.58 points, or 0.14 percent, to 13,326.39. The Standard & Poor's 500 Index .SPX edged up 0.28 points, or 0.02 percent, at 1,432.84. The Nasdaq Composite Index .IXIC slipped 2.40 points, or 0.08 percent, to 3,049.38.
Apple fell 2 percent after a U.S. appeals court overturned a preliminary injunction on the sale of Samsung Electronics Co Ltd's 005930.KS Galaxy Nexus smartphone.
NYMEX- NEW YORK, Oct 11 (Reuters) - U.S. crude futures rose on Thursday as Middle East tensions, especially between Turkey and Syria, continued to reinforce concerns about the risk to oil supply from the region.
News of more delayed North Sea cargoes added support for Brent and U.S. crude.
CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade rose 1.7 percent, the biggest daily gain in two weeks, after the U.S. government raised its estimate of U.S. soybean production but left the stocks-to-use ratio at a near 50-year low.
* Gains pared late due in part to scattered hedge-related selling, traders said.
• USDA raised its estimate of the U.S. soybean yield to 37.8 bushels per acre, up from 35.3 in September, and raised production to 2.860 billion bushels, from 2.634 previously. Both figures were slightly above trade estimates.
• USDA also raised its forecast of U.S. 2012/13 soybean ending stocks to 130 million bushels, from 115 million in September, but the stocks-to-use ratio, a gauge of supply tightness, rose to only 4.4 percent, the lowest since 1965/66.
• China's regular auction of soybeans from state reserves Thursday drew a lukewarm response with only 225,355 tonnes sold, roughly half of what was offered, after the government hiked the bidding price for some stocks by 15 percent.
• Malaysian palm futures rose to their highest in more than a week as a government plan to cut an export tax on crude palm oil offset record stockpiles and weak exports.
• Rains this weekend will likely slow the U.S. Midwest soybean harvest but conditions should turn drier beginning Monday, a forecaster said.
FCPO- SINGAPORE, Oct 11 (Reuters) - Malaysian palm futures rose on Thursday to their highest in more than a week, as a government plan to cut an export tax on crude palm oil offset record stockpiles and weak exports, while traders took positions ahead of a key U.S. report on demand and supply.
Malaysia has approved a plan to slash export taxes from the current level of 23 percent per tonne and will discuss the size of the cut on Friday, a government source said.
The move could boost Malaysia's crude exports and help ease stockpiles from a record of 2.48 million tonnes in September.
"We believe that most of the negative news from the high inventory level has been priced in as crude palm oil prices are currently at a high discount of $350 per tonne against soybean oil," said Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, in a note.
The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange gained 2.7 percent to close at 2,523 ringgit ($822) per tonne, just off an earlier high of 2,525 ringgit, a level last seen on Oct. 1.
Total traded volumes stood at 41,253 lots of 25 tonnes each, far higher than the usual 25,000 lots.
Technicals showed palm oil faces resistance at 2,503 ringgit per tonne, a break above which will open the way towards 2,588 ringgit, according to Reuters market analyst Wang Tao.
Traders are taking positions ahead of the October supply and demand report by the U.S. Department of Agriculture due at 1230 GMT, which is likely to show a larger U.S. soybean crop than initially expected.
A bigger crop of soybeans to be crushed into soybean oil could shift demand away from palm oil.
Palm oil stocks hit an all-time high in September, thanks to record production, but prices are heading for their first weekly gain after three weeks of losses, further suggesting the sharp rise in inventory may already have been factored in.
"The worst may be over, with palm oil production starting on a seasonal downcycle, which should ease the high stockpile," Alvin Tai, an analyst with Malaysia's OSK Investment Bank, said in a research note.
"We note that Q4 tends to be the best quarter for both the palm oil price and plantation stocks."
In a bullish sign for palm oil, Brent crude oil headed on Thursday for its highest close in a month, lifted by escalating tension between Syria and Turkey, maintenance in the North Sea and a supply crunch in oil products. O/R
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 was up 1.4 percent. The most active January 2013 soybean oil contract DBYcv1 on the Dalian Commodity Exchange closed 0.2 percent higher.
REGIONAL EQUITY- BANGKOK, Oct 11 (Reuters) - Stocks in Malaysia, the Philippines and Vietnam slipped in light trade on Thursday, led by blue-chip stocks such as Axiata Group Bhd AXIA.KL and SM Investments Corp SM.PS, as investors, wary of weak global economy, trimmed risks.
Singapore recouped earlier losses, helped by late buying in beaten-down large caps, with the benchmark Straits Times Index .FTSTI ending down 0.04 percent, sliding to a one-month low at one point after three straight sessions of declines.
Among actively traded, DBS Group Holdings DBSM.SI edged up 0.2 percent after falling 2.4 percent in the last three sessions. Some bargain hunting emerged amid expectations of good quarterly results by Southeast Asian companies.
In Bangkok, energy shares outperformed thanks to strong third quarter (July-September) earnings forecasts, with energy explorer PTT Exploration and Production Pcl PTTE.BK up 1.3 percent while the broader SET index .SETI up 0.4 percent.
Morgan Stanley expects upbeat third-quarter earnings across Southeast Asian markets. The brokerage expects MSCI Thailand .MITH00000PTH to see the strongest year-on-year earnings growth at 34.6 percent, driven mostly by energy and financial companies, followed by Malaysia at 19.3 percent.
Concerns about high valuations have weighed on the region, with investors hunting risk shifting to markets that are exposed to global growth, encouraged by central banks pumping in liquidity.
