July 26, 2010 / 5:00 PM / 10 years ago

GLOBAL MARKETS-U.S. housing data boosts stocks; euro gains

* U.S. new home sales boost stocks, risk appetite

* Euro up versus dollar on upbeat European data

By Manuela Badawy

NEW YORK, July 26 (Reuters) - Stocks rose on Monday after U.S. data showed a pick-up in new home sales, reviving hopes for improvement in a tepid economic recovery, while the euro firmed against the dollar on increased risk tolerance.

The euro climbed to $1.30, the highest since July 20, and also received a boost as investors reacted to results of tests of European banks’ health released late on Friday.

Sales of single-family homes in June jumped 23.6 percent, the largest increase since May 1980, from the prior month’s record low, pushing U.S. Treasury prices lower and supporting oil prices. For details, see [ID:nN23137243]

“There was a big revision down in the prior month, but then obviously a rebound this month. We’re still at these trough levels, which we’ve been bouncing along. It’s a good sign that we did see an increase after the tax credit expired,” Michael O’Rourke, chief market strategist at BTIG LLC, New York.

O’Rourke referred to an Obama administration tax break to home buyers to stimulate the economy, which has now expired.

The Dow Jones industrial average .DJI was up 67.06 points, or 0.65 percent, at 10,491.90. The Standard & Poor's 500 Index .SPX was up 9.37 points, or 0.85 percent, at 1,112.03. The Nasdaq Composite Index .IXIC was up 18.67 points, or 0.82 percent, at 2,288.14.

U.S. stocks also got a lift from FedEx Corp (FDX.N) after the bellwether raised its earnings outlook, sending its stock up more than 4 percent. Stronger outlooks for transportation firms like FedEx are seen as a sign of growing economic demand.

European shares closed at a five-week high, helped by the U.S. housing data, with the banking sector among the top performers following the bank stress test results.

The tests were aimed partly at opening the door to funding markets for a batch of southern European banks and lowering costs for other lenders. [ID:nLDE66N02E]

Seven out of 91 banks failed the test, including five from Spain and another 17 barely passed the EU tests which have been widely criticised as not demanding enough.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares closed 0.4 percent higher at 1,048 points.

World stocks as measured by MSCI .MIWD00000PUS were up 1 percent and the Thomson Reuters global stock index .TRXFLDGLPU gained 0.93 percent.

After Friday's release of the European bank stress test results and Monday's strong U.S. housing data for June, the euro EUR= rose to $1.30 against the dollar, the highest since July 20, on electronic trading platform EBS.

Investors were upbeat about a series of reports in the past week showing the broader European economy was stronger than thought.

Against the Japanese yen, the dollar JPY= was down 0.45 percent at 87.05, paring some of its losses after the U.S. housing data.

Purchasing managers’ indexes indicated third-quarter euro zone growth of around 0.6-0.7 percent. German business sentiment also posted a record jump in July to its highest level in three years. And Britain, not in the euro zone, added to the mix with an economy growing twice as fast as expected in the second quarter.

“Despite the market’s single-minded focus on the stress tests, the more important story was the surprisingly strong economic data from the region (last week),” said Boris Schlossberg, a director for currency research at GFT in New York.

U.S. Treasuries fell after the improvement in new home sales data. Benchmark 10-year note US10YT=RR was down 6/32, with the yield at 3.0196 percent. The 2-year U.S. Treasury note US2YT=RR was down 2/32, with the yield at 0.6127 percent. The 30-year U.S. Treasury bond US30YT=RR was down 16/32, with the yield at 4.0481 percent.

U.S. crude oil prices turned positive after the economic data having been pressured earlier on Tropical Storm Bonnie’s fade from the Gulf of Mexico.

Oil CLc1 was trading at around $79 a barrel, flat after rising on the U.S. housing data. The price of gold XAU= fell $6.45, or 0.54 percent, to $1182.10, as the metal lost some of its safe-haven appeal, while European stress test results, robust U.S. company earnings and vigorous euro zone data cut into gold’s appeal. (Additional reporting by Vivianne Rodrigues, Ellen Freilich, Ryan Vlastelica in New York; Editing by Kenneth Barry)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below