GLOBAL MARKETS-Global stocks, euro gain on ECB move, Greece – Reuters
Thu Sep 15, 2011 11:36am EDT
* Wall Street gains for 4th day on ECB move, Greek support
* Rally in European equities, short covering support Brent
* Investors sell safe-haven U.S. debt for riskier assets
* Euro jumps on ECB dollar funding, Greek support (Adds fresh prices, quotes)
By Herbert Lash
NEW YORK, Sept 15 (Reuters) – Global stocks advanced for a third straight day and the euro rallied on Thursday after major central banks moved to boost European bank funding and strong support for Greece by regional leaders eased default fears.
European shares extended gains to 2 percent and the euro jumped almost 1 percent after the European Central Bank unveiled three-month dollar loans in a move to prevent money markets from freezing up. For details see: [ID:nL5E7KF2LG]
The announcement, which was made jointly with the Federal Reserve and other major central banks, sharply boosted European bank shares .SX7P and cut aversion to risk. The price of government debt and gold, both traditional safe havens, fell.
The euro EUR= rose as high as $1.3937, according to electronic trading platform EBS, before easing a bit, up 0.8 percent.
The FTSEurofirst 300 .FTEU3 index of top European shares rose 2.2 percent, and has now gained about 6 percent since touching a two-year low on Tuesday.
“This is good for the European banking system, so we’re seeing a push higher in equity prices,” said Rick Klingman, a Treasury trader at BNP Paribas in New York.
“The ECB-Fed joint announcement is causing a risk-on type trade because they’re providing dollar funding through year-end.”
On Wall Street, the Dow Jones industrial average .DJI was up 96.46 points, or 0.86 percent, at 11,343.19. The Standard & Poor’s 500 Index .SPX was up 7.95 points, or 0.67 percent, at 1,196.63. The Nasdaq Composite Index .IXIC was up 11.41 points, or 0.44 percent, at 2,583.96.
U.S. stocks pared early gains, and the Nasdaq briefly turned negative before midday after Netflix Inc (NFLX.O) cut its forecast, sending its share down 15 percent. [ID:nL3E7KF2CN]
In what analysts called a rare and surprising misstep, Netflix said fewer customers than expected are opting to take its DVD-only subscription package, and it cut its forecast for streaming-only subscribers.
There was widespread optimism in markets even as German Chancellor Angela Merkel bluntly rejected the notion of euro zone bonds — a focal point for market optimism on Wednesday — as a solution to Europe’s sovereign debt crisis. [ID:nL5E7KF1CX]
There was also no clear sign from a conference call of German, French and Greek leaders on Wednesday that a stalemate over Athens’ next bailout payment had been broken. [ID:nLDE78D090]
Investors also pushed aside a fresh spate of disappointing data that showed new U.S. jobless claims rose last week to their highest level since June and a gauge of factory activity in New York state contracted in September. [ID:nS1E78E0CT]
The news supported the view the Federal Reserve could take new action to boost economic growth when it meets next week.
Another survey showed that a gauge of factory activity in the U.S. Mid-Atlantic region contracted for a second month in a row in September, but the rate of decline moderated from a steep drop the month before.
The price of the 30-year U.S. Treasury bond fell more than a full point as the prospect of a long stretch of loose monetary policy coupled with higher inflation prompted investors to dump long bonds.
The 30-year bond US30YT=RR was last off 34/32 in price to yield 3.33 percent. The benchmark 10-year U.S. Treasury note US10YT=RR fell 22/32 in price to yield 2.07 percent.
Bund futures fell as euro zone leaders showed signs of their determination to see out Greece’s debt problems without it leaving the single currency, prompting some to take profit on a recent rally in safe-haven bonds. [ID:nL5E7KF192]
Crude oil rose more than $3 a barrel at one point, buoyed by the rally in European equities, a weaker dollar and improved risk appetite. [ID:nL3E7KF0IJ]
Brent crude LCOc1 for October delivery, which expires on Thursday, was up $2.77 at $115.17 a barrel.
Spot gold prices XAU= fell $45.91 to $1,773.20 an ounce. (Reporting by Gertrude Chavez-Dreyfuss and Emily Flitter in New York; William James, Claire Milhench and Melanie Burton in London; Blaise Robinson in Paris; Writing by Herbert Lash; Editing by Leslie Adler)
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