RTRS: GLOBAL MARKETS-World stocks rise on bailout hopes, gold jumps
By Nick Olivari
NEW YORK, Dec 10 (Reuters) - Optimism that governments worldwide will bail out ailing industries and implement stimulus measures to fight the deepening economic crisis supported stocks globally on Wednesday, raised oil prices and capped recent gains in the yen.
In the latest in the automakers attempt to secure aid, the White House said the government and congressional leaders had reached a "good conceptual agreement" on a plan to help the carmakers but had not yet agreed to a final bill. For details, see [ID:nN10327372]
"People are looking at the bailout as a positive," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "But the headwinds are just enormous, this market has an awful lot to get through," he said.
The Dow Jones industrial average <.DJI> ended up 69.61 points, or 0.80 percent, at 8,760.04. The Standard & Poor's 500 Index <.SPX> rose 10.30 points, or 1.16 percent, at 898.97. The Nasdaq Composite Index <.IXIC> gained 18.14 points, or 1.17 percent, to 1,565.48.
Stocks of energy and materials companies also edged up after trade sources said Saudi Arabia, OPEC's largest oil exporter, informed major customers of a significant cut in supplies for January before next week's OPEC meeting. [ID:nLA242713]
Chevron and Exxon Mobil provided the Dow's biggest lifts, rising 2.4 percent to $77.35 and 1.4 percent to $79.31, respectively. Crude oil jumped more than 1 percent to $42.57 a barrel.
Still it was not all good news with earnings and profit outlooks continuing to cast a pall. Shares of Eastman Kodak slid more than 9.0 percent to $6.53 after the photography company warned 2008 revenue and profit will fall short of expectations. [ID:nN10309478].
European shares <.FTEU3> were little changed at the close, held back by drugmakers as miners rose, but Japan's Nikkei average <.N225> rose 3.2 percent to a one-month closing high.
The MSCI main world stock index <.MIWD00000PUS> ended up 1.63 percent around 222.84.
If sustained, it would be the first time in seven months that the world benchmark has had a monthly gain. The index has lost around 45 percent this year.
"What we are seeing right now may be a gradual turnaround in global stocks as liquidity in financial markets is seen slowly improving, helped by the latest moves by governments," said Jun Ji-won, a market analyst at Kiwoom.Com Securities in Seoul.
BONDS AND DOLLAR SLIP, GOLD UP
U.S. Treasury debt prices slipped on Wednesday, a day after a safe-haven stampede sent ultra-safe three-month bill rates below zero for the first time since the early 1940s.
Below-average demand at a $28 billion auction of three-year notes on Wednesday also put downward pressure on bonds, analysts said. For details see [ID:nTAR000910]
The higher-than-expected yield in the auction underscored the day's uneven demand for U.S. government debt and fanned worries over the possibility of a weak auction of $16 billion in 10-year notes on Thursday, traders said.
Benchmark 10-year U.S. Treasury notes were down 14/32 for a yield of 2.71 percent, up from 2.65 percent late on Tuesday.
In Europe, the 30-year Bund yield was up eight basis points at 3.69 percent.
The U.S. dollar fell to a two-week low against the euro on Wednesday and the yen weakened as U.S. lawmakers reached tentative agreement to extend emergency loans to the ailing auto industry, helping to calm investor anxiety.
The low-yielding yen also fell as the pendulum swung back in favor of currencies and assets that offer a higher return.
"It's safe to say risk appetite has improved somewhat, and that has a lot to do with talk of an imminent bailout for the U.S. auto industry," said Omer Esiner, chief market analyst at Ruesch International in Washington.
Late afternoon, the euro was up 0.8 percent at $1.3022 after earlier hitting a two-week high of $1.3070. It rose 1.4 percent to 120.70 yen while the dollar added 0.6 percent to 92.64 yen .
Analysts said fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully. [ID:nTKF003197]
Gold prices jumped over 4 percent higher on Wednesday, rising above $800 an ounce as the U.S. dollar slipped. Spot gold closed around $807.70 an ounce. (Additional reporting by Leah Schnurr, Richard Leong, Gene Ramos, and Frank Tang in New York, and Joanne Frearson and George Matlock in London)
