NEW YORK (Reuters) - Global shares and the U.S. dollar advanced on Friday as apparent support from German Chancellor Angela Merkel for European Central Bank intervention to calm the euro zone’s debt troubles lifted investor sentiment for a second day.
A record high for Apple Inc (AAPL.O) shares boosted U.S. stocks, and traders eyed a breakout to a new four-year peak, just half a percentage point away on the benchmark S&P 500.
The CBOE VIX volatility index .VIX, considered a gauge of investor angst on Wall Street, plumbed a five-year low in a probable sign that investors see little risk on the horizon.
A key European index hit a 13-month high on speculation euro zone policymakers might be closer to resolving their differences and working closely to tackle the more than two-year-old debt crisis.
In another indication of changing perceptions in Europe, a growing number of economists have concluded that Greece’s fate lies inside the euro zone rather than outside, as previously thought, according to a Reuters poll.
Merkel voiced support for ECB President Mario Draghi’s crisis-fighting strategy on Thursday and urged her European partners to move swiftly toward a closer integration of fiscal policies, saying time was running short.
Her comments, made in Ottawa, came just before markets closed in Europe on Thursday and provided an extra boost to investor sentiment on Friday.
“It’s all about Europe and Merkel’s comments coming out, which appeared to support Draghi,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. “Unless the German constitutional court does something outrageous, we may be moving in the right direction here - at least in the short term.”
The court is expected to deliver a ruling on September 12 on the euro zone’s permanent rescue fund, before which Berlin cannot ratify the treaty on it.
European shares notched their best weekly run in seven years on Friday.
In the United States, the broad S&P 500 was steady after posting its biggest gain in two weeks on Thursday, buoyed by Merkel’s comments and as economic data just beat economists’ expectations. A gauge of U.S. consumer sentiment rose to its highest level since May.
The Dow Jones industrial average .DJI closed up 25.09 points, or 0.19 percent, at 13,275.20. The Standard & Poor's 500 Index .SPX rose 2.65 points, or 0.19 percent, at 1,418.16. The Nasdaq Composite Index .IXIC climbed 14.20 points, or 0.46 percent, at 3,076.59.
Apple rose $11.77 to $648.11, after notching a record high of $648.19 earlier in the day. Broker Jefferies raised its price target on the stock to $900 from $800 and gave it a buy rating. Facebook Inc (FB.O) closed down 4.1 percent at $19.05, after hitting a new low of $19 a share, half its initial public offering price of $38 just three months ago.
The FTSEurofirst 300 index .FTEU3 closed up 0.5 percent at 1,110.16. Benchmark indexes of Spain and Italy, the two countries at the top of investors' worries over the debt crisis, led regional gains, with Spain's Ibex 35 .IBEX rising 1.9 percent and Italy's FTSE MIB .FTMIB rising 1.3 percent.
World stocks as measured by MSCI’s all-country world equity index .MIWD00000PUS rose 0.1 percent at 325.59.
The euro extended losses versus the dollar after the Thomson Reuters/University of Michigan consumer sentiment survey rose to its highest level in three months in early August as sales at retailers and low mortgage rates spurred Americans to boost their buying plans.
The euro fell below $1.23 to hit a global session low of $1.2287. It last traded at $1.2334, down 0.2 percent on the day, according to Reuters data.
The dollar hit its highest against the yen since mid-July at 79.57 yen and last traded at 79.52, up 0.25 percent on the day.
“Consumers are feeling a little better about the current economy, though a little more concerned about the outlook. Current conditions are at the highest level in about three years. That’s encouraging,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.
Yields on U.S. Treasuries edged down from three-month highs but remained at the upper end of a recent trading range as investors lowered bets the Federal Reserve will launch a new bond purchase program when it meets next month.
The benchmark 10-year U.S. Treasury note was up 5/32 in price to yield 1.8157 percent.
Brent crude oil fell below $114 a barrel after the United States said it was considering the possible release of oil reserves to damp down prices and Israel’s president spoke out against a lone Israeli attack on Iran.
Brent crude futures for October delivery fell more than 1 percent on talk of possible releases of U.S. strategic petroleum reserves and expectations that North Sea output will rebound after September production is curbed by maintenance.
Brent crude fell $1.56 to settle at $113.71 a barrel. For the week, Brent rose 76 cents, its third weekly gain.
U.S. crude oil settled up 41 cents at $96.01 a barrel.
The Reuters/Jefferies CRB Index .CRB of 19 commodities was up 0.36 percent at 303.48.
Additional reporting by Marc Jones in London; Editing by Dan Grebler, Leslie Adler and Bernadette Baum