Oct. 6 (Bloomberg) -- A benchmark gauge of U.S. corporate credit risk fell for the third day as data signaled companies may be starting to slow the pace of job dismissals and investor optimism grew that Europe’s leaders will be able to prevent a sovereign debt crisis from infecting bank balance sheets.
The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, dropped 2.2 basis points to a mid-price of 142.8 basis points as of 8:43 a.m. in New York, according to index administrator Markit Group Ltd.
Traders pushed the index lower after applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000, Labor Department figures showed today. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The European Commission is proposing coordinated action to recapitalize banks, Commission President Jose Barroso said.
The swaps index, which typically falls as investor confidence improves and rises as it deteriorates, has decreased from 150.1 on Oct. 3, when it reached the highest level since May 2009.
Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
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