NEW YORK: U.S. and European stock markets rose on Wednesday, Sept 8 as worries about Europe's debt problems eased, allowing the euro to recover part of Tuesday's losses.
Oil prices tracked stocks higher even as low liquidity in equity markets suggested investors were still cautious.
Market sentiment improved after a successful auction of Portuguese debt eased concerns about the credit-worthiness of weaker European economies. On Tuesday, fears about European banks had driven down global stocks and the euro.
Uncertainty about the global economic recovery continued to haunt investors, however, keeping the safe-haven yen near a 15-year high against the dollar and testing the Bank of Japan's resolve to curb currency gains.
"The Portuguese debt auction was perceived well and has helped the market," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"But there is still uncertainty about the global economies and the markets are reacting positively or negatively to minor news as they can't get the answer to the bigger questions. The market is within a trading range and there are wild intraday swings," he added.
MSCI's All-Country World index rose 0.36 percent, supported by gains in Europe and in the United States, but pressured by losses in developing countries. The MSCI stock index for emerging markets fell 0.16 percent.
U.S. stock markets recovered part of the losses seen on Tuesday, when its three major stock indexes slid more than 1 percent.
The Dow Jones industrial average closed up 46.32 points, or 0.45 percent, at 10,387.01, while the Standard Poor's 500 Index rose 7.03 points, or 0.64 percent, to 1,098.87. The Nasdaq Composite Index finished with gains of 19.98 points, or 0.9 percent, at 2,228.87.
Banking shares gained ground, one day after being hit by concerns about the health of their European peers. JPMorgan Chase rose 2.19 percent, Bank of America climbed 1.21 percent, and Wells Fargo ended up 1.2 percent.
In Europe, the FTSEurofirst 300 index rose 0.96 percent to a four-month high of 1,072 points.
Shares in BP rose 1.3 percent after it issued a report shifting much of the blame for the Gulf of Mexico oil spill -- the worst in U.S. history -- onto its contractors Transocean and Halliburton.
In Japan, however, the benchmark Nikkei stock index ended down 2.18 percent, as the strong yen hurt prospects for exporters.
EURO REBOUNDS, YEN HOLDS
The euro recovered against the dollar after Portugal's successful bond auction made its Tuesday slump appear overdone.
The European single currency climbed 0.28 percent against the greenback to $1.2718, after tumbling about 1.5 percent on Tuesday.
"People have gravitated tentatively back towards the equity market. That has helped the euro to climb off its lows," said Dean Popplewell, chief strategist at FX brokerage OANDA in Toronto. "Investors are still relatively uneasy about the financial situations in Europe."
Another factor helping the euro rise was Ireland's finance ministry saying nationalized lender Anglo Irish Bank will be split into a funding bank and an asset recovery bank to wind down its assets.
"Just the (Irish) announcement bought a little relief rally" in the euro, said John McCarthy, director of foreign exchange trading at ING Capital Markets in New York. "But people are looking to sell the euros in substantial rallies as issues such as sovereign debt in the euro zone have not gone away."
Even as European debt fears eased somewhat, lingering concerns about the global economic recovery kept intact the safe-haven appeal of the yen.
The Japanese currency remained practically stable against the dollar, at 83.83 yen per greenback. Earlier on the session, the dollar fell to as low as 83.34 yen on electronic trading platform EBS, its lowest since 1995.
Despite the strength of the yen, Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing. He indicated, however, that the central bank was weighing its options, while Finance Minister Yoshihiko Noda again warned he would take decisive action if necessary.
"Not surprisingly, more rhetoric from Japanese policymakers has been unleashed, though the legitimacy of such talk is still in question until we see some actual action," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
Higher stocks caused benchmark 10-year U.S. Treasuries to fall 16/32 of a point in price, pushing their yield up to 2.6537 percent.
U.S. light crude oil rose 78 cents, or 1.05 percent, to $74.87 per barrel. - Reuters
Oil prices tracked stocks higher even as low liquidity in equity markets suggested investors were still cautious.
Market sentiment improved after a successful auction of Portuguese debt eased concerns about the credit-worthiness of weaker European economies. On Tuesday, fears about European banks had driven down global stocks and the euro.
Uncertainty about the global economic recovery continued to haunt investors, however, keeping the safe-haven yen near a 15-year high against the dollar and testing the Bank of Japan's resolve to curb currency gains.
"The Portuguese debt auction was perceived well and has helped the market," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"But there is still uncertainty about the global economies and the markets are reacting positively or negatively to minor news as they can't get the answer to the bigger questions. The market is within a trading range and there are wild intraday swings," he added.
MSCI's All-Country World index rose 0.36 percent, supported by gains in Europe and in the United States, but pressured by losses in developing countries. The MSCI stock index for emerging markets fell 0.16 percent.
U.S. stock markets recovered part of the losses seen on Tuesday, when its three major stock indexes slid more than 1 percent.
The Dow Jones industrial average closed up 46.32 points, or 0.45 percent, at 10,387.01, while the Standard Poor's 500 Index rose 7.03 points, or 0.64 percent, to 1,098.87. The Nasdaq Composite Index finished with gains of 19.98 points, or 0.9 percent, at 2,228.87.
Banking shares gained ground, one day after being hit by concerns about the health of their European peers. JPMorgan Chase rose 2.19 percent, Bank of America climbed 1.21 percent, and Wells Fargo ended up 1.2 percent.
In Europe, the FTSEurofirst 300 index rose 0.96 percent to a four-month high of 1,072 points.
Shares in BP rose 1.3 percent after it issued a report shifting much of the blame for the Gulf of Mexico oil spill -- the worst in U.S. history -- onto its contractors Transocean and Halliburton.
In Japan, however, the benchmark Nikkei stock index ended down 2.18 percent, as the strong yen hurt prospects for exporters.
EURO REBOUNDS, YEN HOLDS
The euro recovered against the dollar after Portugal's successful bond auction made its Tuesday slump appear overdone.
The European single currency climbed 0.28 percent against the greenback to $1.2718, after tumbling about 1.5 percent on Tuesday.
"People have gravitated tentatively back towards the equity market. That has helped the euro to climb off its lows," said Dean Popplewell, chief strategist at FX brokerage OANDA in Toronto. "Investors are still relatively uneasy about the financial situations in Europe."
Another factor helping the euro rise was Ireland's finance ministry saying nationalized lender Anglo Irish Bank will be split into a funding bank and an asset recovery bank to wind down its assets.
"Just the (Irish) announcement bought a little relief rally" in the euro, said John McCarthy, director of foreign exchange trading at ING Capital Markets in New York. "But people are looking to sell the euros in substantial rallies as issues such as sovereign debt in the euro zone have not gone away."
Even as European debt fears eased somewhat, lingering concerns about the global economic recovery kept intact the safe-haven appeal of the yen.
The Japanese currency remained practically stable against the dollar, at 83.83 yen per greenback. Earlier on the session, the dollar fell to as low as 83.34 yen on electronic trading platform EBS, its lowest since 1995.
Despite the strength of the yen, Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing. He indicated, however, that the central bank was weighing its options, while Finance Minister Yoshihiko Noda again warned he would take decisive action if necessary.
"Not surprisingly, more rhetoric from Japanese policymakers has been unleashed, though the legitimacy of such talk is still in question until we see some actual action," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
Higher stocks caused benchmark 10-year U.S. Treasuries to fall 16/32 of a point in price, pushing their yield up to 2.6537 percent.
U.S. light crude oil rose 78 cents, or 1.05 percent, to $74.87 per barrel. - Reuters
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