NEW YORK (Reuters) - World stocks and commodities rose on Thursday after a European rescue plan for debt-ridden Greece eased fears of a possible sovereign default and data from China drove optimism on economic growth.
A pledge by European Union leaders to support Greece drove U.S. and European stocks higher, but the euro fell against the dollar, hurt by the scant details given on the rescue plan. The single European currency fell below $1.3600 at one point.
The price of copper, often seen as a proxy for world growth, rose more than 6 percent to a two-week high as inflation data from China boosted the outlook for metals demand and the deal to support Greece helped lift risk appetite.
China reported a jump in lending and slower inflation, suggesting the world’s top base metals consumer is on track for growth.
U.S. Treasury debt prices fell on the revived appetite for riskier assets, but U.S. gold futures rose to end above $1,090 an ounce as investors turned to the metal as a hedge against currency market volatility in the wake of the Greece rescue plan.
The European Union on Thursday pledged to support Greece, with EU President Herman Van Rompuy saying that Europe was sending “a clear message of solidarity,” a line echoed by Germany and France.
“They moved everything up on more of a posture by the EU to come up with something creative on Greece as opposed to not knowing what to do,” said Stephen Carl, principal and head of U.S. Equity Trading at the Williams Capital Group in New York.
“It looks like they are putting things in place and the market is reacting favorably just because there is a plan. Let’s see how they implement it.”
The Dow Jones industrial average .DJI closed up 105.81 points, or 1.05 percent, at 10,144.19. The Standard & Poor's 500 Index .SPX gained 10.34 points, or 0.97 percent, at 1,078.47. The Nasdaq Composite Index .IXIC climbed 29.54 points, or 1.38 percent, at 2,177.41.
Wall Street was also boosted by a greater-than-expected decline in first-time claims for U.S. jobless benefits, pointing to stabilization in the labor market.
Mining and material stocks rose on both the optimism over a plan for Greece and the news out of China.
In Europe the FTSEurofirst 300 .FTEU3 index of top European shares rose for a fourth straight session to close 0.3 percent higher at 990.51 points after a choppy session that saw the index hovering in a broad range of 980.16 to 997.26.
Mining shares rose on higher metal prices, but banks were the top decliners, with investors still jittery over the lack of details of a plan to help Greece.
Oil prices rose 1 percent to above $75 a barrel as investors returned to riskier assets.
U.S. crude for March delivery settled at $75.28 a barrel, up 76 cents. In London, Brent crude settled at $73.05 a barrel, up 51 cents.
Despite the return to risky assets markets remained concerned about whether the EU pledge would be enough to pull Greece out of fiscal crisis, leading the euro to slip against the dollar.
“They’ve come to an agreement that they’re going to give Greece moral support basically. They got nothing concrete and everything was kind of murky,” said Ronald Simpson, director of currency research at Action Economics in Tampa, Florida.
“In the bigger picture, the European Union can’t really do a full-fledged bailout of Greece. That just raises the moral hazard issue,” he added. “I think the euro is probably going to remain under pressure for the foreseeable future.”
The euro fell 0.33 percent at $1.3681. Against the yen, the dollar was down 0.29 percent at 89.71.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index .DXY down 0.01 percent at 80.017.
U.S. Treasury prices fell on the easing of risk aversion, but the U.S. government closed out a week of poor bond sales.
The government sold $16 billion of 30-year bonds at a yield of 4.720 percent -- the highest since August 9, 2007 -- and above expectations.
The 30-year U.S. Treasury bond was down 19/32 in price to yield 4.68 percent.
U.S. gold futures ended above $1,090 an ounce as investors turned to the metal as a hedge against currency market volatility after news that European governments agreed in principle to support heavily indebted Greece.
Gold contracts for April settled up $18.40 at $1,094.70 an ounce.
Reporting by Leah Schnurr, Rebekah Kebede and Wanfeng Zhou in New York; David Brett, Kirsten Donovan, George Matlock, Brian Gorman, Christopher Johnson and Jan Harvey in London; writing by Herbert Lash; Editing by Leslie Adler