* Euro rises to four-month high vs dollar
* German court ruling supports demand for riskier assets
* Anticipated further Fed easing should aid stocks, euro,
By Ellen Freilich
NEW YORK, Sept 12 Stocks rose and the euro
climbed to a four-month peak against the dollar o n W ednesday
after Germany's Constitutional Court approved the euro zone's
new rescue fund, easing concerns about the region's debt crisis
and leaving markets focused on prospective further easing by the
U.S. Federal Reserve.
The German court approval also boosted global stocks and cut
borrowing costs for Spain and Italy.
"Today's positive ruling from the court solidifies the view
that European officials are getting control over the sovereign
debt crisis," said Boris Schlossberg, managing director of FX
strategy at BK Asset Management in New York.
The euro climbed as high as $1.2936, its highest
since mid-May. The common currency has risen more than 7 percent
since it hit a two-year low of around $1.2040 in July, boosted
after the European Central Bank's pledge to do whatever it takes
to preserve the euro.
More gains are expected if the U.S. central bank implements
further monetary easing o n T hursday, since more accommodative
U.S. monetary conditions should weaken the dollar against other
currencies, including the euro.
U.S. stocks have rallied on expectations the Fed will ease
again. In a two-day meeting that concludes on Thursday, the
Federal Open Market Committee must decide whether to launch a
third round of bond purchases to lower borrowing costs and
breathe more life into an economy that is not growing quickly
enough to reduce unemployment.
"(It all hinges on) which way the Fed chooses to go," said
Peter Jankovskis, co-chief investment officer at OakBrook
The Dow Jones industrial average gained 9.99 points,
or 0.07 percent, to 13,333.35. The Standard & Poor's 500 Index
was up 3.00 points, or 0.21 percent, at 1,436.56. The
Nasdaq Composite Index was up 9.79 points, or 0.32
percent, at 3,114.31.
The S&P 500 index has advanced more than 9 percent since the
start of June on hopes for global central bank stimulus.
Another phase of asset purchases by the Fed would likely
focus on mortgage-backed securities, strategists said.
With so much expectation built up, action by the Fed that is
too cautious would be an unwelcome surprise, they said.
"If the Fed declines to move forward with another round of
quantitative easing, support for risk assets may weaken," said
Zach Pandl, Columbia Management senior interest rate strategist.
On Wall Street, shares of Facebook Inc jumped 7.2
percent to $20.83 after Chief Executive Mark Zuckerberg hinted
at new growth areas in his first major public appearance since
the No. 1 social network's rocky IPO in May.
Brent crude oil prices rose 30 cents to $115.70 a barrel on
the German judicial decision, expectations for Fed easing and
rising geopolitical risk after militants killed the U.S.
ambassador to Libya.
But U.S. October crude slipped 16 cents to settle at
$97.01 a barrel, after reaching $98.06. It dropped as low as
$96.31, below the $96.62 200-day moving average, a technical
level closely watched by traders.
"More monetary liquidity plus geopolitical risk equals
higher oil prices despite fundamentals like weaker manufacturing
and demand," said Kimberly DuBord, director of research at
Briefing Research in Chicago.
European stocks touched a 14-month high and the MSCI global
share index, up 6.5 percent since the end of
July, hit a five-month high of 332.42 before dipping back to be
up 0.4 percent at 331.72 as profit-taking set in.
The German court's ruling damped demand for safe-haven
assets like U.S. Treasuries and German bunds, leading to more
tepid demand for the U.S. Treasury's $21 billion auction of
The benchmark 10-year Treasury note fell 16/32
in price, its yield rising to 1.76 percent from 1.71 percent
late on Tuesday.
Bund futures fell to their lowest since July.