March 4, 2013 / 8:31 PM / 5 years ago

GLOBAL MARKETS-Wall Street lifts global stocks, supply weighs on oil

* Chinese stocks cap gains in global equities

* U.S. crude briefly dips below $90 for first time this year

* Euro near recent lows as talk of rate cut gains strength

By Rodrigo Campos

NEW YORK, March 4 (Reuters) - Late-day gains in U.S. stocks buoyed a gauge of global equities on Monday as an earlier dip attracted investors, while indicators that oil markets are amply supplied weighed on crude prices.

A gauge of world shares was kept unchanged by Chinese indexes after weak manufacturing and services sectors data added to concern about slower growth in the world’s second-largest economy.

China’s government could also increase down-payments and loan rates for buyers of second homes in cities where prices are rising too quickly.

Growth concerns prompted initial caution on Wall Street but investors took advantage of an earlier decline to jump in, even as indexes hover near historic or multi-year highs.

“The stock market still represents opportunity for investors, especially when you look at the domestic market, but it wouldn’t be surprising if we pulled back on the concerns over China and Europe,” said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina, which manages $5 billion.

The Dow Jones industrial average rose 32.04 points or 0.23 percent to 14,121.7, the S&P 500 gained 5.42 points or 0.36 percent to 1,523.62 and the Nasdaq Composite added 8.66 points or 0.27 percent to 3,178.4.

MSCI’s world equity index edged up 0.1 percent. European shares closed down 0.02 percent at 1,168.36 even as mining stocks posted a 2.1 percent fall.

A lack of progress in talks to form a new Italian government after last week’s inconclusive elections weighed most on the country’s stocks, down 0.85 percent, while 10-year bond yields rose to 4.881 percent after hitting more than 5 percent earlier in the session.

Analysts said yields could have climbed higher but for the ECB’s promise to support struggling nations but there remained doubts over how this could be implemented without a government able to enact tough reforms.

The euro hovered near recent lows against the U.S. dollar, pressured by political uncertainty in Italy and expectations the ECB will cut interest rates sooner than previously anticipated.

The euro zone common currency was up less than 0.1 percent at around $1.302, not far from Friday’s 11-week low of $1.2966.

“There’s growing speculation that the (ECB) will show a greater willingness to push the benchmark interest rate to a fresh record low,” said David Song, currency analyst at DailyFX in New York.

“The fundamental developments coming out of the euro area may continue to drag on the exchange rate should it highlight a weakening outlook for growth and inflation,” Song added.

U.S. Treasury debt prices dipped further as stocks gained.

Treasuries could likely stay range-bound for much of the week as markets await an ECB policy meeting on Thursday and key U.S. jobs data on Friday.

“The market’s a bit expensive to really go ‘gung-ho’ and buy at this point even though there’s a lot of risk,” said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

The 10-year U.S. Treasury note fell 10/32 in price to yield 1.8772 percent, after the yield hit a fresh six-week low of 1.827.


Concern about China’s growth, alongside expectations of even slower growth in the United States, weighed on crude oil prices.

“Economic sentiment has shifted, and we’re also seeing the first stages of long liquidation in the oil market. Money managers had increased their exposure (to oil) a lot over a 10-week period,” said energy analyst Tim Evans at Citi Futures in New York.

The International Monetary Fund said U.S. spending cuts that were triggered last Friday could cost the world’s biggest oil consumer about 0.5 percent of its economic growth, a factor that could weigh on global oil demand.

Total U.S. oil inventories are up 9 percent from year-ago levels and domestic oil and liquids production has risen by around one-fifth due largely to a boom in shale drilling, Evans added, citing the most recent data from the U.S. Energy Information Administration.

U.S. crude briefly traded below $90 a barrel for the first time this year and settled at $90.12, down 0.6 percent. Brent settled down 0.3 percent at $110.09 a barrel.

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