April 23, 2010 / 4:20 AM / 10 years ago

Economic data, Greece accord lift stocks, euro

NEW YORK (Reuters) - Global stocks and the euro rose on Friday as Greece’s request for emergency aid gave measured hope that the nation’s short-term debt situation could be resolved soon and U.S. and European economic data underscored that a global rebound was forging ahead.

A man looks at a stock market board at a business district in Tokyo April 19, 2010. REUTERS/Toru Hanai

The brightening economic outlook in the United States, as new-home sales shot up 27 percent in March, and the diminishing fears of an acute debt crisis in Europe reduced demand for U.S. Treasury debt prices as investors curbed their bid for safety.

U.S. stocks hit a 19-month high, helped by energy shares as crude oil prices rose 1.7 percent on the positive economic data.

Greece’s move to activate a 45 billion euro EU/International Monetary Fund bailout package and a statement of support from Germany, which had initially been reluctant to make any commitment to support Greece, reassured investors.

There was skepticism, however, about the longer-term prospects for Greece.

“There is a bit more certainty over Greece ... but the true fact of the matter is that 45 billion (euros) isn’t enough to sort out the Greek problem,” said David Morrisson, market strategist at GFT Global.

The uncertainty limited gains in the euro, which rebounded after earlier sinking to a one-year low of $1.3202.

With liquidity in Greek bonds practically dried up and the yield on a two-year Greek paper soaring, market players had predicted that the debt-ridden country had little alternative to seeking financial aid. Two-year Greek yields, after topping 12 percent on Thursday, declined to about 10.8 percent on Friday. The yield started the year near 4 percent.

On Wall Street, stocks rose broadly after a two-day selloff as drug maker Merck eased concerns about the impact of health-care reform, saying its costs will be relatively low.

The Dow Jones industrial average .DJI rose 69.99 points, or 0.63 percent, to 11,204.28. The Standard & Poor's 500 Index .SPX climbed 8.61 points, or 0.71 percent, to 1,217.28 and the Nasdaq Composite Index .IXIC increased 11.08 points, or 0.44 percent, to 2,530.15.

Merck & Co (MRK.N) jumped 5 percent to $35.46, making it the top gainer on the Dow. The drugmaker said its costs related to U.S. health-care reform will be a far smaller percentage of total company sales compared with rival drug makers.

The S&P healthcare index .GSPA was up 1.1 percent but is down 2.5 percent for the month.

“The sector has been a dismal performer for almost a month now, so maybe investors are finally beginning to get their hands around all the minutia in the legislation that was passed and what it actually means for companies in the near term,” said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

Shares of homebuilders rose after the U.S. Commerce Department said sales of newly built single-family homes rose to the highest level in eight months as buyers rushed to take advantage of a homebuyer tax credit.

Shares of homebuilder Lennar Corp (LEN.N) rose 4 percent to $20.53. An index of homebuilder shares .DJUSHB rose 3.3 percent.

Microsoft Corp Inc (MSFT.O) slipped 1.3 percent to $30.99 after it reported its quarterly profit jumped, but the report failed to meet Wall Street’s heightened expectations.

World stocks as measured by MSCI .MIWD00000PUS rose 0.62 percent.

In Europe, the FTSEurofirst 300 .FTEU3 index of top European shares closed up 0.8 percent at 1,092.24 points, rebounding from a three-week closing low on Thursday.

Banks were among the biggest gainers as the concerns over Greece eased.

European shares were also boosted by a much better-than-expected German business sentiment survey from Munich-based research firm Ifo, which climbed to 101.6 from an upwardly revised 98.2 in March.

Shares in Volvo (VOLVb.ST) , the world’s No. 2 truck maker, soared more than 10 percent after its first-quarter profit beat expectations. Ericsson (ERICb.ST) , the maker of mobile telecom gear, also rose about 10 percent on strong margin growth.

The battered euro rose for the first day in seven amid confidence that the financial aid package for Greece would help stanch the crisis that has gripped the nation this year.

The euro’s rebound lost steam as analysts said tapping the aid mechanism was not likely to solve Greece’s longer-term problems in tackling its budget deficit. Investors sought clarity and details on how the loan would be disbursed.

“The euro bounce is very limited because the activation itself lacked details,” said Amelia Bourdeau, senior currency strategist at UBS in Stamford, Connecticut. “We don’t know how long it’s going to take for parliaments in Europe to ratify the process of giving Greece the money.”

The euro rose 0.58 percent to $1.3367. Against the Japanese yen, the dollar rose 0.59 percent to 93.97, and the U.S. Dollar Index .DXY declined 0.20 percent to 81.405.

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U.S. Treasury debt prices fell after reports pointed to stronger economic growth, which could increase inflation and reduce returns on fixed-income securities. In addition to home sales, U.S. non-defense capital orders excluding aircraft — a gauge of business investment — rose in March.

Yields on benchmark 10-year Treasury notes rose 0.05 percentage point to 3.82 percent.

In energy and commodities prices, U.S. light sweet crude oil rose $1.42, or 1.7 percent, to settle at $85.12 per barrel, and spot gold prices rose $14.85, or 1.30 percent, to $1,155.80.

Additional reporting by Ian Chua, Simon Falush, Naomi Tajitsu, Brian Gorman and Harpreet Bahl in London; Editing by Leslie Adler

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