GLOBAL MARKETS-Stocks rebound as Ukraine jetliner tensions ease

Tue Jul 22, 2014 3:24pm EDT

* Risk appetite rises on cooperation with Ukraine
separatists
    * S&P 500 sets new intraday high, European shares surge
    * Dollar gains as euro sinks to eight-month low

 (Adds oil settlement prices)
    By Herbert Lash
    NEW YORK, July 22 (Reuters) - Global equity markets and the
dollar rode a rebound in risk appetite on Tuesday that lifted
the S&P 500 to a record high on signs of cooperation from
Ukraine's pro-Russian separatists over last week's downing of a
Malaysian jetliner.
    Benign underlying U.S. inflation in June also supported
stocks on views that the U.S. Federal Reserve will continue on a
slow path to paring its bond purchase program and will begin to
raise interest rates only in the latter half of 2015.
    After days of uncertainty, a train carrying the remains of
some of the almost 300 victims arrived in Ukrainian government
territory and separatist leaders have given Malaysian
authorities the aircraft's flight recorders. 
    The news helped settle market nerves, lifting shares in
Asia, Europe and then on Wall Street as U.S. markets opened, and
weakening safe-haven assets like the yen, gold and government
bonds, which have been in demand over the past week.
    MSCI's all-country equity index rose 0.69
percent, while the FTSEurofirst 300 index of leading
European shares climbed 1.32 percent to close at 1,373.75. All
major European bourses closed up 1 percent or more.
    The benchmark S&P 500 set a record intraday high, though
gains on Wall Street were not as strong as the rally in Europe.
    The Dow Jones industrial average rose 65.01 points,
or 0.38 percent, at 17,116.74. The Standard & Poor's 500 Index
 was up 9.52 points, or 0.48 percent, at 1,983.15. The
Nasdaq Composite Index was up 28.10 points, or 0.64
percent, at 4,452.81. 
    While geopolitical concerns remained high as Israel pounded
targets across the Gaza Strip, saying no ceasefire was near, the
fighting was viewed as no worse than on previous days.
    "Things have not worsened," said Tom di Galoma, head of
fixed income rates and credit trading at ED&F Man in New York.
"Equity markets globally were fairly robust, starting with Asia,
Europe, and now Wall Street."
    The euro fell to an eight-month low against the greenback,
breaking below its key support of $1.35, largely on expectations
the European Central Bank would provide more stimulus in the
coming months, lowering regional interest rates.
    The single currency also hit a 5-1/2-month low versus the
Japanese yen.
    The euro lost 0.41 percent against the dollar to
trade at $1.3467. Against the yen, the dollar rose 0.06
percent to 101.45.
    The benchmark 10-year U.S. Treasury note 
rebounded slightly, up 2/32 in price to yield 2.4673 percent.
    Brent crude for September delivery fell 35 cents to
settle at $107.33 a barrel, while U.S. oil for August delivery
 slid 17 cents to settle at $104.42 a barrel. The U.S.
August contract expires on Tuesday.
    
    

 (Reporting by Herbert Lash; Additional reporting by Marc Jones
in London; Editing by Dan Grebler and Meredith Mazzilli)
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