* World stocks rally; Russian shares, rouble, rebound
* S&P hits intraday record, FTSE posts biggest gain in 9
* Gold, yen and oil fall as Russia-West tensions ease
* U.S. criticizes Moscow's weekend move into Ukraine
By Richard Leong and Herbert Lash
NEW YORK, March 4 Stocks and other risky
investments, including battered Russian assets, rallied on
Tuesday after Russia's president said he saw no need to use
military force in Crimea for now, remarks investors saw as
intended to ease tensions over Ukraine.
President Vladimir Putin delivered a robust defense of
Russia's actions in Crimea, but he also sought to ease East-West
tension over fears of war in the former Soviet republic. His
comments reversed most of the markets' moves on Monday.
The rouble rose 1.2 percent to 36.05 to the
dollar as Russian stocks jumped 5.3 percent, recouping
almost half of the previous day's losses.
Putin told a news conference that Russia's use of force in
Ukraine would be a choice of "last resort" and that sanctions
being considered against Moscow by the West would be
Putin's remarks did not quell criticism from U.S. President
Barack Obama, who said Russia's aggression in Ukraine is not a
sign of strength. U.S. Secretary of State John Kerry, who was in
Kiev, said Moscow was looking for a pretext to invade further
into its neighbor.
As investors moved back into stocks, they unwound safe-haven
positions in gold, yen and U.S. and German government debt. Oil
prices fell as Putin's gesture reduced the chances that energy
supply from Russia, the No. 2 world oil exporter, could be
disrupted or subject to sanctions.
"In the short term, the market always over-reacts," said Kim
Forrest, senior equity research analyst at Fort Pitt Capital
Group in Pittsburgh. "We got marginally good news today, but we
don't know what's going to happen tomorrow."
Forrest said she expects volatility to return to the market
as the situation in Ukraine remains fluid.
Despite uncertainties over Putin's next move and how the
United States and Europe will respond, Wall Street stocks
surged, outpacing Monday's losses as the benchmark S&P 500 index
booked a new intra-day high.
European stocks also rose, with the pan-European
FTSEurofirst 300 index closing at 1,344.83, up 2
percent, making up more than half of Monday's drop and staging
its biggest one-day gain in nine months.
MSCI's all-country world stocks index, which
tracks stocks in 45 countries, rose 1.2 percent to 410.05.
On Wall Street, the Dow Jones industrial average
jumped 218.11 points or 1.35 percent, to 16,386.14, the S&P 500
gained 26.21 points or 1.42 percent, to 1,871.94 and the
Nasdaq Composite added 75.689 points or 1.77 percent, to
Safe-haven government debt on both sides of the Atlantic
retreated, driving yields higher as demand for low-risk assets
waned. The yields on 10-year U.S. Treasuries and
German Bunds rose 7 basis points and 4 basis points
to 2.67 percent and 1.60 percent, respectively.
"Respite with the Russia-Ukraine situation is taking some of
the flight-to-quality bid out of the (U.S.) Treasury market,"
said Robert Tipp, chief investment strategist at Prudential
Fixed Income in Newark, New Jersey.
"The rapid developments over the weekend, especially coming
amidst mixed data in the U.S., for a brief interval, took the
wind out of the sales of the risk-on trade," said Tipp.
Earlier in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan rose nearly 0.2 percent and
Tokyo's Nikkei closed 0.5 percent as some foreign
investors scooped up battered shares.
In currency markets, the euro gained 0.7 percent
to 140.29 yen, but it drifted a tad lower versus the dollar
at $1.3727. It recovered against the Swiss franc, another
safe-haven currency, up 0.4 percent at 1.2177 franc.
"Given three days' worth of bad headlines, I think the
market was just willing to take any sort of stability it can
get," said Geoffrey Yu, a strategist with UBS in London.
Gold, another traditional safe haven, fell after rallying
nearly 2 percent on Monday. Gold futures were last down
0.93 percent, at $1,337.7 an ounce.
Brent crude fell $1.95 or 1.75 percent at $109.25 a
barrel, while U.S. oil futures lost $1.64 or 1.56 percent
at $103.28 per barrel.