Crossover index little changed

The closely watched iTraxx Crossover index was little changed late on Thursday, as stocks rose, interest rates stayed on hold and US data showed the economy was weathering the subprime storm, but credit markets remained nervy.
The Crossover index, widely used as a barometer for risk appetite and made up of 50 mostly "junk"-rated credits, was 3 basis points tighter at 331 basis points by 1545 GMT, a trader said.
The investment-grade iTraxx Europe was 0.25 basis points wider at 48.75 basis points. The moves were largely driven by changes in equity market sentiment. "It's that all-important thing called the Dow Jones. Dow Jones is up 50, world's a better place. Dow Jones is down 50, we're all going to lose our jobs tomorrow," the trader said.
By 1555 GMT, the Dow Jones industrial average was up 0.46 percent at 13,366.60. But activity in the credit market remained largely subdued, with trading flows limited due to uncertainties stemming from problems in the US subprime market.
"The willingness of investors to transact in this market has virtually ground to a halt as uncertainties surrounding the impact of the bursting of the subprime bubble, central bank interest rate policy, and higher interbank funding rates remain top of the agenda," said Suki Mann, credit strategist at Societe Generale.
"It's not how just about everyone expected the first week following the holidays to have panned out, but we do lack clarity on many issues that are currently strangling the credit market." Interest rates were the focus of the day, with both the European Central Bank and the Bank of England holding rates steady, at 4 percent and 5.75 percent, respectively.
ECB President Jean-Claude Trichet said the central bank would monitor developments on financial markets as well as inflation very closely, failing to give a clear signal on any further rise in eurozone interest rates.
He did not repeat the key "strong vigilance" phrase, which is seen as a signal that a rate rise is on the cards, but instead stressed the bank, would keep a close eye on markets.
In data, the ISM services index showed US service sector growth held steady in August. The index was unchanged in August at 55.8 from July, above forecasts for a drop to 54.8. A number above 50 indicates growth. A day after drugmaker AstraZeneca priced $6.9 billion of bonds, the company hired Citigroup, Deutsche Bank and HSBC to arrange meetings with euro debt investors.
AstraZeneca may consider a bond issue in the future, one of the banks said. The company said it had seen strong demand for the four-part dollar bond sale, proceeds from which will be used to refinance commercial paper taken on in its acquisition of biotechnology company Medimmune.