GLOBAL MARKETS-Stocks up, U.S. debt down on German court ruling
* Stocks up after top German court backs euro zone bailout fund
* Brent crude up after German court ruling and killing of U.S. diplomats in Libya
* Euro rises to four-month high above $1.29 after German court ruling
* Risk assets seen benefiting from expected Fed easing
NEW YORK, Sept 12 (Reuters) - U.S. stocks opened higher and global shares reached a five-month high after Germany's top court gave its go-ahead to the euro zone's new rescue fund and the market anticipated more liquidity from the U.S. Federal Reserve.
The German Constitutional Court allowed Germany to ratify the new rescue fund and budget, but gave parliament veto powers over future increases in the size of the fund.
Oil also rose as the German court ruling cleared a potential obstacle on the road to aiding the euro zone and global economy. Oil was also boosted on political risk, underscored by the killing of the U.S. ambassador to Libya and three other staff members.
"We have the expectation for some liquidity - by the Fed, by the ECB, and Mario Draghi has been aggressive in his statements," said Leo Kelly, managing director at HighTower Advisors in Sparks, Maryland, referring to the European Central Bank president.
The Dow Jones industrial average was up 32.45 points, or 0.24 percent, at 13,355.81. The Standard & Poor's 500 Index was up 4.38 points, or 0.31 percent, at 1,437.94. The Nasdaq Composite Index was up 4.89 points, or 0.16 percent, at 3,109.42.
The Federal Reserve begins a two-day policy meeting on W ednesday and markets expect it to announce more easing measures when the meeting concludes on Thursday.
European stocks touched a 14-month high and yields on Spanish and Italian debt fell after the German court decision.
The decline in Spanish bond yields to well below 6 percent prompted Spain's Prime Minister Mariano Rajoy to say improved market conditions may make aid unnecessary.
On Wall Street, Apple Inc will be in focus when it unveils its newest iPhone, widely expected to offer 4G wireless technology for the first time and a 4-inch display, bigger than the current 3.5 inches. Apple shares slipped 0.02 percent to $660.42 in early trade.
Facebook Inc rose 5.98 percent to $20.58 in premarket trading after CEO Mark Zuckerberg soothed investors in his first major public appearance since the No. 1 social network's rocky IPO in May; he hinted at new growth areas from mobile to search.
The German Constitutional Court ruling boosted the bonds of Italy and Spain since the euro zone rescue fund is intended to contain borrowing costs for those countries.
The euro rose to its highest level since May. The euro has been the best-performing major global currency since the ECB's Draghi pledged to do whatever was needed to "preserve" it at the end of July. It hit a four-month high of $1.2936 versus a broadly weaker dollar and rose to a two-month high against sterling after the German court ruling.
With riskier assets drawing investors, safe-haven U.S. debt and German bund futures retreated after the ruling.
The benchmark 10-year Treasury note fell 15/32 in price and its yield rose to 1.75 percent from 1.71 percent late Tuesday.
Bund futures fell to their lowest level since July. In contrast, Spanish and Italian bonds rallied, with yields down 10 and 6 basis points, respectively.
The FTSEurofirst 300 index of top European shares gained 0.19 percent , after the German court decision, having been up just 0.07 percent beforehand. The MSCI global share index, up 6.5 percent since the end of July, hit a five-month high of 332.42 points before dipping back slightly as profit-taking set in.
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