* Upbeat earnings activity boosts U.S., European shares
* Euro falls on below-forecast German inflation data
* Draghi cools ECB QE talk; Fed to begin policy meeting
* U.S. bond yields rise as Apple prepares huge bond deal
(Updates market action,)
By Richard Leong
NEW YORK, April 29 World stock indexes rose on
Tuesday on solid company earnings, while the euro slipped as
weaker-than-expected German inflation data kept alive chances of
more stimulus from the European Central Bank.
Worries about Ukraine moved to the back burner, for now,
after the United States and European Union imposed more
sanctions on Russia for its role in backing the separatist
movement in eastern Ukraine.
Relief that the West's broadened sanctions on Moscow were
limited led some investors to step back into stocks and other
risky assets and to pare safe-haven holdings in gold and U.S.
and German government debt.
U.S. and German benchmark yields
rose to 2.70 percent and 1.50 percent, respectively. U.S. bond
yields were also under pressure on a bond offering from iPhone
maker Apple which may raise $8 billion to $10 billion,
according to IFR, a unit of Thomson Reuters.
Oil prices rebounded after posting their biggest fall in a
month as traders focused on the ongoing violence in eastern
Ukraine and a possible delay in U.S. relaxation of sanctions on
Iran later this year.
"The Ukraine situation played an important role here. The
tension there has been diffused for now. You have some decent
earnings in the U.S. and Europe as well," Robbert Van Batenburg,
director of market strategy at Newedge USA LLC in New York, said
of the gains in equities.
Upbeat news from Finnish telecom giant Nokia and
German chipmaker Infineon inspired European stock
markets, while encouraging results from U.S. drugmaker Merck
and mobile provider Sprint helped Wall Street open
The equity-friendly tone to markets on Tuesday was helped by
news Britain's economy grew at a solid 0.8 percent pace in the
first quarter, giving an annual growth rate of 3.1 percent, the
fastest since 2007.
Private data showed U.S. home prices grew at a solid clip in
February, though Americans' confidence in the economy dipped in
April from the highest in more than six years set in March.
In midday trading, the Dow Jones industrial average
rose 106.41 points or 0.65 percent, to 16,555.15, the S&P 500
gained 10.86 points or 0.58 percent, to 1,880.29 and the
Nasdaq Composite added 36.844 points or 0.9 percent, to
The FTSEurofirst 300 index of top European shares
provisionally closed up 1.2 percent at 1,352.41, while Tokyo's
Nikkei earlier closed down 1 percent.
With the gains in the U.S. and Europe, the MSCI world equity
index, which tracks shares in 45 nations, rose
Investors also took cues from the mixed signals on whether
European policy-makers will ease policy in the coming weeks and
months to fight off the threat of deflation.
ECB President Mario Draghi told German lawmakers on Monday
that further monetary easing in the form of bond-buying remains
some way off. [ID:nB4N0MZ00E}
A report due on Wednesday is expected to show inflation in
the euro zone picking up to 0.8 percent in April, but that would
still be well below the ECB's medium-term target of just below 2
percent. An omen of another below-target reading came on Tuesday
when Germany said its annual inflation was 1.1 percent in April
but less than the 1.3 percent rise expected.
"This will spark hopes the ECB will conduct another round of
unconventional policy. The ECB may not have a choice," Newedge's
Central bank purchases of bonds, such as those the Federal
Reserve has conducted and begun to dial back, are designed to
hold down long-term interest rates and bolster economic
activity. But they also erode the country's currency.
The euro was down 0.3 percent at $1.3806 and off 0.2
percent at 141.65 yen.
The dollar index, a measure of the greenback's value against
six major currencies, rose 0.2 percent at 79.823.
As traders speculate on the ECB's next move, the Fed will
begin a two-day policy meeting on Tuesday, and is expected to
trim its bond-buying stimulus further.
In commodity markets, Brent crude was up $1.05, or
0.97 percent, at $109.17 a barrel, and U.S. crude was
last up 52 cents, or 0.52 percent, at $101.36 per barrel.
Spot gold prices erased earlier gains, dipping 31
cents or 0.02 percent, to $1,295.29 an ounce.
(Reporting by Richard Leong; additional reporting by Jamie
McGeever, Marius Zaharia and Tricia Wright; Editing by Alison
Williams, Dan Grebler and Meredith Mazzilli)