US STOCKS-Wall St rises for 3rd day as Europe plans advance

Thu Oct 6, 2011 12:00pm EDT

Related Topics

* Banks gain on ECB liquidity measure

* Jobless claims rise modestly, but less than expected

* Research in Motion rises on deal talk

* Dow up 0.8 pct, S&P up 1 pct, Nasdaq up 1.1 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to midday)

By Edward Krudy

NEW YORK, Oct 6 (Reuters) - U.S. stocks rose on Thursday after the European Central Bank launched fresh liquidity measures to help banks weather the euro zone's debt crisis, easing one of the major concerns overhanging markets.

But a decision not to cut interest rates in the region and tough comments about the risks facing the economy by ECB President Jean-Claude Trichet left some investors disappointed and added to volatility.

Anxiety that the region's lingering debt crisis could lead to a bank collapse has pressured equities and pushed the S&P 500 briefly into bear market territory earlier this week.

The ECB, wary of the region's fiscal woes spiraling into a global crisis, said it will revive 12-month loan operations and purchases of covered bonds, while it kept key interest rates unchanged at 1.50 percent. See [ID:nF9E7KR00X]

The ECB's buying of covered bonds is intended to boost confidence in stocks and other risky assets such as commodities and high-yielding bonds.

Shares of Morgan Stanley (MS.N), which have been hurt recently by fears about its exposure to European banks, rose 5.8 percent to $15.37. The S&P financial index .GSPF gained nearly 2 percent and was the best-performing sector.

"That has been the worry for the past six months that the banks would suffer some real problems and the fact that the ECB is going to back them up, or potentially back them up, is alleviating some of the concerns," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville

Thursday's advance marked the third up day for Wall Street with a nearly 5 percent gain for the S&P 500 over the three days.

The Dow Jones industrial average .DJI gained 89.68 points, or 0.82 percent, to 11,029.63. The Standard & Poor's 500 Index .SPX rose 11.93 points, or 1.04 percent, to 1,155.96. The Nasdaq Composite Index .IXIC gained 26.40 points, or 1.07 percent, to 2,486.91.

European Commission President Jose Manuel Barroso said the EU's top executive body proposed a coordinated recapitalization of banks amid the region's sovereign debt crisis. Officials said nothing was finalized. [ID:nL5E7L610F]

Meanwhile, ECB President Jean-Claude Trichet said the economic outlook "remains subject to particularly high uncertainty and intensified downside risks" after the ECB kept interest rates on hold, though some investors had hoped for a cut. [ID:nL5E7L616W] and [ID:nECBNEWS]

Yahoo Inc (YHOO.O) fell 4.8 percent to $15.15 after advancing late Wednesday. Microsoft Corp (MSFT.O) may make another bid for Yahoo, Reuters reported, citing sources. A deal between the two fell apart in 2008. [ID:nN1E7941K7]

U.S.-listed shares of Research in Motion Ltd RIMM.ORIM.TO rose 2.5 percent to $24.18 on continued speculation the BlackBerry maker could be acquired. [ID:nN1E7940U7]

Apple Inc (AAPL.O) rose 1 percent to $382 a day after co-founder Steve Jobs, the driving force behind the creation of the iPod, iPhone and iPad, died at the age of 56. [ID:nN1E79420Z]

New claims for unemployment benefits rose less than expected last week, hinting at an improved labor market a day before the closely watched September non-farm payrolls report. [ID:nOAT004875]

On Friday, the government will report non-farm payrolls data, which is expected to show a return to growth in September after August's flat reading. On Wednesday, a report from payrolls processor ADP showed overall private-sector payrolls rose by 91,000, topping forecasts. (Editing by Jan Paschal)

FILED UNDER: