Euro, global stocks rise on earnings, solid debt sales
NEW YORK (Reuters) - Strong corporate earnings drove most global equity markets higher on Tuesday while the euro rose after solid demand at auctions for European government debt eased concerns about the euro zone's growing economic slump.
Yields on Dutch, Spanish and Italian debt fell as sales were well received, calming markets a day after the government in the Netherlands collapsed in a crisis over budget cuts.
Data on the U.S. housing market also boosted optimism about the U.S. economic recovery and helped stoke risk appetite.
Big U.S. manufacturers continued a wave of strong earnings growth, with results from United Technologies Corp (UTX.N), 3M Co (MMM.N), Illinois Tool Works (ITW.N) and Parker-Hannifin Corp (PH.N) topping Wall Street forecasts.
Recovering U.S. demand helped offset the weak European economy and slowing growth in China, which until recently had been a reliable source of rapid growth for big American companies.
AT&T Inc (T.N) also beat forecasts, and its stock advanced 3.6 percent. With 153 companies in the benchmark S&P 500 Index having reported their results, more than three-fourths topped expectations, according to Thomson Reuters data.
"These results serve as a reminder that while near-term volatility is all but certain, the strength of corporate America remains intact, and valuations remain attractive," said Mark Martiak, senior wealth strategist at Premier/First Allied Securities in New York.
The Dow and the S&P 500 rose, but the Nasdaq fell as Apple (AAPL.O), due to report results after the market's close, was the biggest drag, accounting for almost four-fifths of its slide. The stock fell 2 percent to $560.28 in volatile trading.
The Dow Jones industrial average .DJI was up 74.39 points, or 0.58 percent, at 13,001.56. The Standard & Poor's 500 Index .SPX was up 5.03 points, or 0.37 percent, at 1,371.97. The Nasdaq Composite Index .IXIC was down 8.85 points, or 0.30 percent, at 2,961.60.
In Europe, shares rebounded as companies posted bullish updates, such as French tire maker Michelin (MICP.PA), which rose 6.1 percent. The FTSEurofirst 300 .FTEU3 index of top European companies closed up 1.1 percent to 1,032.50, a day after hitting a three-month low.
Bill Dinning, head of strategy at Kames Capital, said there did not seem to be any doubt that companies are in robust health. "That's reflected in strong earnings, in high levels of margins and in very strong balance sheets," he said.
Global shares as measured by the MSCI world equity index .MIWD00000PUS rose 0.5 percent to 323.01.
The euro rallied against the dollar after two U.S. housing reports eased worries about the U.S. economic recovery while stoking risk tolerance at the start of a two-day meeting of Federal Reserve policymakers.
"We're really seeing the euro gain a footing," said David Song, currency analyst at DailyFX. "Market participants are taking on more risk on the positive housing data."
The euro, which had its worst day in a week on Monday, gained about 0.3 percent to $1.3188.
The U.S. dollar was down against a basket of major trading-partner currencies, with the dollar index .DXY down 0.23 percent at 79.24.
U.S. single-family home prices rose in February for the first time in 10 months, according to the closely watched S&P/Case-Shiller report.
A composite index of prices in 20 U.S. metropolitan areas gained 0.2 percent in February on a seasonally adjusted basis, Case Shiller said, matching economists' forecasts.
A separate Commerce Department report showed new single-family home sales sagged in March to their lowest in four months but sales in the prior three months were revised higher than initially reported.
U.S. Treasury debt prices dipped on easing political concerns regarding France and the Netherlands, while investors waited for U.S. debt sales and results from the Fed meeting.
The benchmark 10-year U.S. Treasury note was down 9/32 in price to yield to 1.97 percent.
The sudden collapse of the Dutch government as it tried to cut its budget, a rise in the vote for populist parties in the French election and business outlook data indicating Europe's recession has months to run have shifted sentiment this week.
"Institutional investors are finding it quite difficult making a decision on where to invest in Europe right now," said Ian Stannard, head of European FX strategy at Morgan Stanley.
A widely watched auction of fresh debt by the Dutch government went off smoothly even though ratings agency Moody's warned the country's AAA rating could be at risk if there was any weakening in the commitment to fiscal discipline from the political turmoil there.
Spanish and Italian bond auctions were well covered but their borrowing costs rose again, showing political uncertainty was still uppermost in investors' minds.
Brent crude prices fell and U.S. crude edged up, narrowing the spread between the two benchmarks, while weak gasoline futures weighed on the complex as market participants rotated positions ahead of weekly inventory reports.
Brent June crude fell 55 cents to settle at $118.16 a barrel. U.S. June crude rose 44 cents to settle at $103.55 a barrel.
Gold prices rose after gains in equities and industrial metals but selling pressure capped the rise ahead of a U.S. option expiration and on uncertainty over the Fed meeting.
U.S. gold futures for June delivery settled up $11.20 an ounce at $1,643.80.
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