GLOBAL MARKETS-Shares, euro rally on Greek hopes, German data

Fri Nov 23, 2012 12:39pm EST

* Wall St jumps on hopes for Greece, retail in focus

* European shares post best week for 2012

* Euro hits 3-week high vs dollar on optimism about a Greek deal

* World shares headed for their best week since mid-Sept

By Angela Moon

NEW YORK, Nov 23 (Reuters) - Global stocks and the euro rose on Friday on signs of progress in talks about releasing aid to Greece and after an influential German survey found business sentiment had improved in Europe's largest economy.

Wall Street got a lift from bellwether technology stocks such as Intel and Microsoft - each up about 2 percent. An index of semiconductor stocks gained 1.8 percent, while the S&P information technology sector index rose 1.2 percent.

Friday marked the start of the holiday shopping season and gave investors a reason to scoop up retailers' shares on hopes that consumers will go out en masse to spend.

Regular U.S. stock trading session will end early on Friday at 1 p.m. (1800 GMT). The stock market was closed on Thursday for the Thanksgiving holiday. With many investors away on holiday, volume was low. About 1.9 billion shares have traded so far on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the daily average for the year to date of 6.5 billion.

The Dow Jones industrial average was up 106.42 points, or 0.83 percent, at 12,943.31. The Standard & Poor's 500 Index was up 11.89 points, or 0.85 percent, at 1,402.92. The Nasdaq Composite Index was up 32.30 points, or 1.10 percent, at 2,958.85.

European shares posted their best weekly gain so far this year after rising for a fifth day on Friday. The FTSEurofirst-300 index of pan-European shares rose 0.6 percent to end at 1,110.45.

Germany's BASF and Bayer led a rally in chemical stocks after a German business morale index surprised with its first increase in seven months, raising the prospect that Europe's largest economy can regain some momentum.

The euro rose as high as $1.2943 on Reuters data, breaking above resistance at $1.2910, its 55-day moving average. It was last trading at $1.2941, up 0.5 percent on the day.

Against the yen, the euro also hit a seven-month high of 106.73 yen and was last at 106.65 yen, up 0.4 percent.

MSCI's world equity index was up 1 percent on Friday at 329.42 points. It was on track to record its best weekly performance since mid-September.

Earlier, MSCI's broadest index of Asia Pacific shares outside Japan rose 0.7 percent for a weekly gain of 2.6 percent, also its best week for two months.

Optimism about a deal to help Greece, hopes that United States lawmakers can agree on a solution to avoid a fiscal crisis, and data showing an improving global economic outlook have driven a rally in riskier asset markets this week.

Greece said the International Monetary Fund had relaxed its debt-cutting target for the country, suggesting lenders were closer to a deal for a vital aid tranche to be paid. But other sources involved in the talks cautioned that the funding gap was far bigger than Greece has suggested.

"While we wouldn't want to understate the challenges of reaching agreement on Greece, news reports have described some of the remaining obstacles as technical and legal, and thus the hurdles to a deal do not seem insurmountable," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York.

Euro-zone finance ministers, the IMF and the European Central Bank (ECB) failed earlier this week to agree on how to get the country's debt down to a sustainable level. They will make a third attempt at resolving the issue on Monday.

"Anything positive out of Europe related to the sovereign debt ... that can act as a catalyst," said Todd Salamone, director of research at Schaeffer's Investment Research in Cincinnati.

The S&P 500 looked likely to break a two-week losing streak, having gained more than 3 percent this week so far. Stocks had tumbled earlier in the month on worries about the impact of mandatory tax and spending changes to take effect in early January, but hopes that politicians will reach a deal to avoid the "fiscal cliff" helped the market recoup some of those losses this week.

The benchmark S&P 500 also climbed back above the 1,400 level, which could provide support.

U.S. government debt prices mostly dipped on Friday in light post-Thanksgiving holiday trading. Bonds' safe-haven allure faded as investors scooped up stocks.

On the open market, the benchmark 10-year U.S. Treasury note traded 1/32 lower in price to yield 1.685 percent, up 0.5 percent from late on Wednesday. The 10-year note's yield was poised for its first weekly rise in five weeks.

GOLD AND OIL GAIN

In commodities, gold rose to its highest level in more than a month on Friday, gaining 1 percent as a combination of a decline in the dollar, options-related buying and technical support sent the metal up near $1,750 an ounce.

Oil rose above $111 a barrel on Friday as better-than-expected German business sentiment data helped ease worries about demand in the euro-zone economies, boosting the euro against the dollar, while fresh protests broke out in Egypt and led to supply concerns.

Brent crude futures were up 53 cents at $111.08 a barrel at 1607 GMT. U.S. crude was up 81 cents at $88.17. The U.S. market, which was closed on Thursday for the Thanksgiving holiday, will not issue a formal settlement price until later Friday.

On Thursday, Israel began withdrawing its army, which had been poised to invade the Gaza Strip in pursuit of militants firing rockets into Israel.

Although the Gaza ceasefire is holding, violence has emerged in Egypt. In Cairo's Tahrir Square, thousands of people participated in demonstrations against President Mohamed Mursi. Police fired teargas into the crowd in an attempt to disburse it.

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