* Shares rise after Alcoa's solid start to U.S. earnings
* Greek aid deal initially lifts euro, euro zone debt
* Oil eases as supply boosts outweigh Egypt worries
By Herbert Lash
NEW YORK, July 9 Global equity markets extended
gains on Tuesday and the dollar hit a three-year high, spurred
by an optimistic tone among investors after a good start to the
U.S. earnings season and last week's strong U.S. June jobs data.
Adding to the optimism, the pace of hiring by U.S. employers
increased in May, the Labor department said in a report that was
a positive sign for the American job market.
Equity markets initially responded favorably to aluminum
producer Alcoa, traditionally the first major U.S.
company to report quarterly earnings, which posted encouraging
results after markets closed on Monday.
Nine of the S&P's 10 industry sector indexes were higher.
Industrial and material shares logged the biggest gains, though
Alcoa declined 0.5 percent after opening higher.
Alcoa said it sees solid growth in global demand this year.
The benchmark S&P 500 index is trading about 1 percent below
its all-time closing high of 1,669.16 reached on May 21.
"Whether we go through the 1,650 level is key, and if we do
then we probably get a retest of the May highs," said Dave
Chojnacki, market technician at Street One Financial in
Huntington Valley, Pennsylvania.
The Dow Jones industrial average rose 79.95 points,
or 0.53 percent, at 15,304.64. The Standard & Poor's 500 Index
was up 12.06 points, or 0.74 percent, at 1,652.52. The
Nasdaq Composite Index was up 18.59 points, or 0.53
percent, at 3,503.42.
According to Thomson Reuters data through early Tuesday,
analysts' expectations call for earnings of S&P 500 companies to
rise 2.9 percent in the second quarter from a year ago, while
revenue is forecast to increase 1.5 percent in that period.
Of the 23 companies in the S&P 500 that have reported
results, 65.2 percent have beaten analyst expectations, 21.7
percent reported earnings in line with expectations and 13.0
percent reported results that were below expectations.
"I would think that the trend is going to be up," said Jeff
Meyerson, head of trading for Sunrise Securities in New York.
"We could at any time have a substantial correction again, but I
think we still have a trend that's doing OK. That will be
determined by how the earnings come out in the next few weeks."
Miners powered European shares to their highest close in a
month, boosted by adjusted profit and revenue at Alcoa that were
above expectations and helped to buoy sentiment in the sector.
Comment from Deutsche Bank also helped basic resources
stocks, which are still down 27.7 percent on the year on
"There are seeds of recovery out there now that were not
there a year ago," said Robert Quinn, chief European equity
strategist at Standard & Poor's Capital IQ. "I think we are
pretty close to a turning point in earnings downgrades for
The FTSEurofirst 300 index of leading European
companies hit its highest in a month before paring some gains as
a deal to provide Greece the latest 6.8 billion euro ($8.7
billion) installment of its bailout bolstered the upbeat mood.
The broad regional index rose 0.79 percent to a close of
MSCI's all-country world equity index rose
Greece's aid deal helped Greek and Portuguese bonds
add to their gains of the last few days. It also
helped lift the euro off the seven-week low it has been
at since the European Central Bank made clear last week it is
prepared to cut interest rates again.
The euro dropped to a session low against the dollar after
ratings agency Standard & Poor's lowered Italy's sovereign
credit rating. The currency fell as low as $1.2754, a
three-month low, and was last at $1.2767, down 0.8 percent on
The dollar rose toward recent three-year highs against a
basket of currencies, with more investors betting on further
gains as the Federal Reserve prepares to reduce its stimulus
The dollar's biggest gains were against the British pound
after weaker-than-expected UK data drove sterling close to a
three-year low and highlighted the divergence between UK and
U.S. monetary policy.
The dollar index, which measures the greenback
against a currency basket, was up 0.57 percent at 84.676.
The euro found some support after Greece secured aid that
will prevent it from defaulting in August.
But comments by European Central Bank policymaker Joerg
Asmussen weighed on the euro.
"Markets are not putting too much faith in central bank
verbal guidance," he said.
U.S. Treasuries prices held steady as investors prepared to
make room for a $32 billion three-year note sale, the first part
of this week's $66 billion in coupon-bearing supply.
The 10-year U.S. Treasury note was up 3/32 in
price to yield 2.6264 percent.
Brent crude oil fell toward $107 a barrel as worries about
supply disruptions in the Middle East eased, though investors
were wary that more negative headlines from Egypt could trigger
Brent fell 5 cents to $107.38 after slipping to a
session low of $106.85 earlier. U.S. crude rose 5 cents