GLOBAL MARKETS-Stocks rise on Bernanke, economic data; euro gains

Wed Feb 27, 2013 12:54pm EST

* Solid Italy debt sale strengthens euro after election
    * S&P 500 up 1 pct; focus on Bernanke
    * European and Italian stocks bounce back
    * U.S. durable goods minus transportation up


    By Caroline Valetkevitch
    NEW YORK, Feb 27 (Reuters) - Global stock indexes rose on
Wednesday as Federal Reserve Chairman Ben Bernanke reaffirmed
his strong support for the Fed's stimulus efforts, while the
euro edged up after solid demand at an auction of Italian
government debt.
    Data on U.S. housing and durable goods added to bullish
sentiment in stocks. The U.S. benchmark S&P 500 was up more than
1 percent.
    Bernanke's comments came in his second day of testimony in
Congress. His defense on Tuesday of the Fed's monetary stimulus,
which eased worries over a possible early retreat from its
policy of bond purchases, helped U.S. stocks rebound from their
worst decline since November. 
     "Bernanke's comments will keep liquidity in place in the
market and every dip now is being viewed as an opportunity to
get in," said Dan Veru, chief investment officer at Palisade
Capital Management, in Fort Lee, New Jersey.
    Some markets also were relieved as Italy sold all 6.5
billion euros of the 5- and 10-year bonds offered to investors.
It could have chosen to sell less, though it paid more than half
a percentage point more in interest than before its election.
    Two days after the vote offered no party a majority, markets
had been concerned about the country's finances. 
    Investors fear the strength of the vote for anti-austerity
parties in Italy could weaken efforts to reform public finances
and labor laws and damage the euro zone's efforts to resolve its
three-year old debt crisis.
    The euro rose for the first time in three sessions,
climbing as high as $1.3129. It last traded at $1.3094, up 0.3
percent on the day.
    The MSCI world equity index was up 0.8
percent, and the pan-European FTSEurofirst 300 index 
ended 0.9 percent higher.
    The European index was helped by gains in Italy's benchmark
index, which jumped 1.8 percent after falling 4.9
percent on Tuesday.
    On Wall Street, the Dow Jones industrial average was
up 127.05 points, or 0.91 percent, at 14,027.18. The Standard &
Poor's 500 Index was up 14.72 points, or 0.98 percent, at
1,511.66. The Nasdaq Composite Index was up 32.36
points, or 1.03 percent, at 3,162.01. 
    U.S. economic data also underpinned the market, with durable
goods orders excluding transportation increasing 1.9 percent,
the largest gain since December 2011, and well above economists'
expectations of a 0.2 percent gain. Another report on Wednesday
showed that contracts to buy previously owned homes approached a
near three-year high last month. 
 
    Italian bonds and those of other euro zone countries that
are the focus of concern over their creditworthiness were helped
by the sale, with safe-haven German bonds falling
before recouping losses.
    Italian 10-year yields fell 7 basis points to
4.83 percent in the secondary market while German Bund futures
were up 27 basis points on the day at 145.09 after the sale.
    Italy and Spain's need to change the shape of their
economies, boost growth and reduce debt, have been at the heart
of the euro zone's troubles for over a year. But fears have
eased substantially since the European Central Bank said it
would do whatever was necessary to prevent a break-up of the
euro.        
    
    U.S. BOND PRICES UP SLIGHTLY
    U.S Treasuries pared most of their earlier price gains as
investors prepared for the Treasury to auction new seven-year
notes. 
    Small price gains were maintained on safety buying on
worries over the automatic U.S. spending cuts due to take effect
on Friday unless lawmakers reach a budget deal and on the
political uncertainty in Italy.
    Benchmark 10-year Treasuries were last up 3/32
in price to yield 1.87 percent, down from 1.89 percent late on
Tuesday. The prices have rallied since yields hit around 2
percent last week.
    In the precious metals market, gold retreated after rising
more than 1 percent in the previous session, as fund investors
cashed in some gains. Spot gold was down 0.4 percent to
$1,606.26 an ounce. 
    The yen edged higher against the dollar, benefiting from
Japanese fiscal year-end flows and its status as a safe-haven
currency. 
    The U.S. dollar last traded at 91.84, down 0.1 
percent on the day, above a one-month low of 90.92 and below a
33-month high of 94.76 touched on Monday. 
    The euro stood at 120.38, up 0.2 percent on the
day, above Monday's one-month low of around 118.74 yen.