| LONDON, Sept 7
LONDON, Sept 7 World stocks rose from a two-week
low on Wednesday and the euro rebounded across the board after
Germany's top court rejected lawsuits aimed at blocking Berlin's
participation in bailout packages for Greece and other euro zone
The Constitutional Court also handed the country's
parliament a greater say over euro zone bailouts, potentially
hampering the government's ability to act decisively against a
two-year-old debt crisis.
But it at least cleared the way for Germany to contribute
more to the euro zone's rescue fund, giving temporary relief to
investors after this week's sharp sell-off in risky assets.
Better-than-expected data on the U.S. services sector and
Australian growth as well as speculation that Washington may
unveil a $300 billion package to create new jobs also helped
improve the mood.
"Today's ruling should bring some relief to financial
markets as a total chaos scenario has been avoided but it should
not lead to euphoria," said ING economist Carsten Brzeski.
"The ruling confirms our view that the German piecemeal
approach on the debt crisis is not likely to change but
eventually the German parliament will vote in favour of a second
Greek bailout package and the beefed-up EFSF."
MSCI world equity index rose 1 percent after
hitting its lowest since Aug. 22 on Tuesday. The benchmark index
is still down more than 10 percent.
European stocks gained 1.9 percent, having hit a
two-year low in the previous day.
"We got a brief pop higher in equity markets. It doesn't
really change much, except the perception that the euro might
collapse, if the Germans ruled (bailouts) unconstitutional, so
that fear has gone in the short term," said Michael Hewson,
market analyst at CMC Markets.
Emerging stocks added 1.9 percent. U.S. stock
futures were up around 1 percent SPc1, pointing to a firmer
open on Wall Street later.
U.S. crude oil CLc1 rose 1.2 percent to $87.09 a barrel.
Investors also looked ahead for measures to boost growth
from Group of Seven finance ministers meeting this weekend and
separately from U.S. President Barack Obama.
IMF Managing Director Christine Lagarde has called for
governments to consider recapitalising banks and adjusting
budget austerity drives to support growth, the concerns at the
centre of market weakness since late July.
Sources told Reuters G7 finance ministers will discuss
measures at a summit at the end of the week and CNN cited
Democratic sources on Wednesday saying that Obama plans to lay
out a job-creation package on Thursday with new spending offset
by budget cuts .
Bund futures FGBLc1 fell 50 ticks, tracking a dip in U.S.
Treasuries after the CNN report.
The dollar gained 0.5 percent against a basket of
The euro had risen as much as 0.8 percent to $1.4100
at one point, after falling as low as $1.3971 on Tuesday.
"There's been a lot of pessimism priced into the market this
week but we're grinding through the worst of it so
understandably we've had a mini pull-back here," said Nomura
rate strategist Sean Maloney. "But event risk remains high and
we expect more pitfalls to come."
The Swiss franc, which had been along with gold the safe
haven of choice for investors, held within the 1.2000 per euro
target set on Tuesday by the Swiss central bank to
weaken the franc and prevent a recession.
The dollar lost half a percent to 77.16 yen .
The Bank of Japan kept its policy settings unchanged and
maintained its assessment that the economy was steadily picking
up, with output and exports nearly returning to levels before a
devastating earthquake and tsunami in March tipped Japan into
(Additional reporting by Kirsten Donovan; Editing by Ruth