* Yen slides broadly as Russia sanctions seen as modest
* Crimea referendum eases safety bid for U.S. Treasuries
* U.S. stocks also boosted by factory data
By Angela Moon
NEW YORK, March 17 World stocks rose sharply on
Monday as prices of the safe-haven yen and U.S. Treasuries fell,
a day after Crimea's vote to join Russia passed without major
violence, easing fears that had driven world stocks to a
one-month on Friday.
The yen fell broadly after the United States and the
European Union imposed what investors perceived to be only
modest economic sanctions on some officials of Russia and
Ukraine following Crimea's vote to join Moscow.
Although investors are not ruling out another flare-up in
tensions between Russia and Ukraine, many do not expect
contagion to major markets. The lack of military conflict
between the two countries also appeased investors.
"The sanctions don't sound particularly aggressive," said
Richard Franulovich, senior currency strategist at Westpac
Securities in New York. "Also, some of the worst-case scenarios
they were anticipating over the weekend, such as actual military
engagement, did not really materialize."
Wall Street opened sharply higher on Monday, up more than 1
percent, rebounding from last week's steep decline.
"This is a classic example of too much fear and anxiety
having been in the market. Last week's decline more than
discounted any bad news that could be reasonably expected to
come out," said Donald Selkin, chief market strategist at
National Securities in New York.
The Dow Jones industrial average rose 187.19 points,
or 1.17 percent, to 16,252.86. The S&P 500 gained 18.45
points, or 1 percent, to 1,859.58, and the Nasdaq Composite
added 45.208 points, or 1.06 percent, to 4,290.605.
The geopolitical tension over Ukraine weighed on equities
last week, with the S&P 500 suffering its biggest weekly loss in
seven and the CBOE Volatility index jumping to its
highest level since early February on Friday.
The MSCI world equity index, which tracks
shares in 45 countries, rose 0.7 percent, after hitting a
one-month low on Friday.
The dollar rose 0.4 percent against the yen, to
101.76 yen, after four days of losses.
The euro gained 0.6 percent against the yen, to 141.83 yen
. It also climbed against the dollar, to $1.3941,
despite a dip in euro zone inflation, the latest indicator to
argue for outright money-printing by the European Central Bank
to support growth.
Europe's common currency has traded within a cent of a
2-1/2-year high around $1.3967 since Thursday, when the ECB
president, Mario Draghi, voiced concerns about the euro's
European stocks rose 1.1 percent, and the broader
Euro STOXX 600 rose around 1.2 percent. Emerging stocks
added 0.6 percent.
Shares from the mining and industrial sectors featured among
the biggest gainers, with BHP Billiton up 1.2 percent
and ArcelorMittal up 1.12 percent
FED IN FOCUS
In the latest economic data, the New York Fed's Empire State
gauge of New York manufacturing rose in March, helped by
increases in new orders and inventories, though the rise was
less than forecast. Separately, U.S. industrial output rose 0.6
percent in February, a far bigger rise than had been expected.
"The data gives us another kick up, since it is another sign
that we're recovering from recent weather issues," said Selkin,
who helps oversee about $3 billion in assets.
With the Crimea vote out of the way, investors are now
focusing on the Fed's two-day policy meeting that begins on
Tuesday; the central bank is expected to continue to reduce the
size of its bond purchase program but alter its forward
"They are going to move away from thresholds on specific
economic indicators and take a more holistic approach that
depends on subjective evaluation of a broad array of economic
indicators. They are trying to move back to a more normal
approach to policy," said Ward McCarthy, chief financial
economist at Jefferies in New York.
The Fed previously said that it would not raise interest
rates until joblessness fell to at least 6.5 percent, a pledge
that policymakers thought would hold until at least mid-2015.
But that rate hit a five-year low of 6.6 percent in January,
before rising to 6.7 percent in February.
Benchmark 10-year notes fell 8/32 in price on
Monday to yield 2.67 percent, in the middle of a two-month long
range that has kept yields between 2.57 percent and 2.82
U.S. crude oil rose further on Monday, gaining for a third
session in a row. U.S. crude oil fell 0.4 percent to
$98.52 a barrel.