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GLOBAL MARKETS-Shares and euro gain as hopes for economy rise
December 11, 2012 / 4:35 PM / 5 years ago

GLOBAL MARKETS-Shares and euro gain as hopes for economy rise

* European shares rise after ZEW German confidence jump
    * Wall Street higher, Apple leads gains
    * Fed expected to announce new Treasury securities purchases
    * Oil prices tick up on Egypt, Syria tensions

    By Wanfeng Zhou
    NEW YORK, Dec 11 (Reuters) - Global shares rose to their
highest in almost two months and the euro gained versus the
dollar on Tuesday after German investor sentiment improved
sharply in December and on expectations the Federal Reserve will
keep pumping money into the U.S. economy.
    The dollar weakened as investors steered clear of the U.S.
currency ahead of the Fed's two-day meeting that will begin
later in the day. U.S. Treasury prices fell as gains in stocks
eroded safe-haven demand for government debt.
    Morale among German analysts and investors improved sharply
in December, jumping to 6.9 against expectations of -12.0,
fanning hopes that Germany, Europe's largest economy, will avoid
recession this winter. 
    The unexpected improvement in German data helped lift Wall
Street. The Nasdaq led the advance as investors picked up some
recent laggards, including Apple. The company's shares have been
beaten down recently, partly as investors book profits before a
possible rise in capital gains taxes next year.
    Weaker stocks are drawing buyers in hopes of a market turn
around next year, said Michael Sheldon, chief market strategist
at RDM Financial in Westport, Connecticut. 
    "I doubt there's going to be a lot of conviction based on
volume when everything is said and done at the end of the day,"
said Sheldon.
    The Dow Jones industrial average gained 110.34
points, or 0.84 percent, to 13,280.22. The Standard & Poor's 500
Index rose 12.62 points, or 0.89 percent, to 1,431.17.
The Nasdaq Composite Index added 40.84 points, or 1.37
percent, to 3,027.80.
    The lack of progress in negotiations about the U.S. "fiscal
cliff" has kept investors from making aggressive bets in recent
weeks, though most expect a deal will eventually be reached.
    While the pace of talks in Washington to avert impending
U.S. tax hikes and spending cuts quickened, senior politicians
on both sides cautioned that an agreement on all the outstanding
issues remained uncertain.      
    The FTSEurofirst 300 index posted its highest close
since May 2011, provisionally closing up 0.4 percent at 1,139.17
points. The MSCI global stock index hit its
highest level since Oct. 19 and was last up 0.7 percent at
337.27 points.
    The U.S. central bank is expected to announce a new round of
Treasury securities purchases at the end of its meeting on
Wednesday, according to a Reuters poll. The program would
replace its "Operation Twist" stimulus, which expires at the end
of the year. 
    Many economists believe the Fed will announce monthly bond
purchases of $45 billion, although some think it could be more.
    "We anticipate the Fed will announce Treasury purchases, and
as that depresses yields, it will have a negative impact on the
dollar and that supports the euro," said Jane Foley, senior
currency strategist at Rabobank.
    Expectations of more easing drove the dollar index 
down 0.3 percent and pushed the Canadian dollar to a
two-month high, while the New Zealand dollar hit a nine-month
high of $0.8369.
    The euro rose 0.5 percent to $1.2999, while against
the yen the dollar was little changed at 82.34 yen.
    Markets had been rattled on Monday by Italian Prime Minister
Mario Monti's announcement he would step down some weeks early.
But the upbeat ZEW data helped lift shares and the euro from
their gloom.
 
    Benchmark 10-year Treasury notes were trading 10/32 lower in
price to yield 1.6524 percent, the highest in over a
week and up from 1.63 percent late Monday. Investors were also
pushing for price concessions heading into $66 billion of U.S.
government debt auctions this week.
    In the oil market, Brent crude rose 66 cents to
$107.98 a barrel after OPEC said its production declined in
November, while the weaker dollar and Middle East unrest also
supported prices. 
    U.S. crude gained 27 cents to $85.83.
    Gold was steady near $1,708 an ounce, with more U.S.
stimulus expected to support gold's appeal as a hedge against
inflation.

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