August 4, 2014 / 2:35 PM / 4 years ago

GLOBAL MARKETS-Stocks climb, bond yields dip after Portuguese bank rescue

(Adds U.S. market open, quote; changes dateline; previous
    By Chuck Mikolajczak
    NEW YORK, Aug 4 (Reuters) - Bond prices rallied and European
bank stocks rose on Monday after Portugal devised a plan to
prevent the collapse of one of its biggest lenders. 
    U.S. stocks edged up in early trade, with the S&P 500 
coming off its worst week since 2012, as concerns over higher
U.S. interest rates eased following Friday's U.S. employment
    Lisbon on Sunday announced a near 5 billion-euro ($6.6
billion) rescue of the country's largest listed bank, Banco
Espirito Santo, preventing it from collapsing and
potentially destabilizing the regional banking sector.
    "From a technical viewpoint, the market managed on Friday to
hold the lower end of the trading range and the fact we did that
is helping the market out this morning," said Peter Cardillo,
chief market economist at Rockwell Global Capital in New York. 
    "News from Portugal certainly is a step in the right
direction and after the sharp losses of last week, the market
needs to catch its breath."
    Portugal's 10-year yield fell to 3.575 percent,
down 7 basis points, as investors bought the bonds on relief
after the package was announced. Other European bond markets
also rallied, with yields on Spanish and Italian bonds moving
lower .
    The FTSEurofirst 300 index of leading shares was
down 0.02 percent, giving up early gains. Pan-European banking
stocks were up 0.4 percent, however.     
    The MSCI All-World Index rose marginally, up
0.1 percent.
    U.S. financial shares rose, lifted by a 1.4 percent
gain in Berkshire Hathaway  after the company
helmed by Warren Buffett said on Friday that second-quarter
profit soared 41 percent. 
    The Dow Jones industrial average was up 11.56 points,
or 0.07 percent, at 16,504.93. The Standard & Poor's 500 Index
 was up 3.66 points, or 0.19 percent, at 1,928.81. The
Nasdaq Composite Index was up 13.13 points, or 0.30
percent, at 4,365.77. 
    The rate-sensitive U.S. two-year Treasury note yield was
little changed at 0.47 percent and the 10-year yield
fell to 2.48 percent, declining in tandem with
European yields.
    Bond yields were also capped by Friday's U.S. jobs data for
July, which showed job growth lower than forecast, the
unemployment rate higher than expected, and almost no growth at
all in average hourly earnings. 
    A Reuters poll on Friday after the jobs data showed that a
majority of top Wall Street bond firms do not see a rise in U.S.
interest rates before the second half of next year.
    Major currencies were flat on Monday. The euro was at
$1.3423, off last week's eight-month low of $1.3365,
while the dollar stood at 102.50 yen, off Wednesday's
four-month peak of 103.08 yen.
    U.S. crude oil futures were up 34 cents at $98.22 per barrel
, recovering from a six-month low of $97.09 on Friday, and
Brent crude was up 55 cents at $105.39. Spot gold was
little changed at $1,290.49 an ounce.

 (Reporting by Chuck Mikolajczak; Editing by Dan Grebler)
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