Global stocks edged higher, a day after a powerful sell-off, and oil rose after Goldman Sachs and Morgan Stanley raised their price targets for crude.
U.S. stock futures appeared poised to open slightly higher after the Dow sank 130 points on Monday. Dow futures were up 30 points, or 0.2 per cent, at 12,392, while S&P 500 futures gained 3.6 points, or 0.3 per cent, to 1,318.80.
VIDEO
Preparing for higher interest rates
VIDEO
Jeff Rubin on natural gas
VIDEO
LinkedIn looks good...from the sidelines
In Europe, the FTSE 100 climbed 0.5 per cent and the CAC 40 index 0.3 per cent. Frankfurt's DAX advanced 0.8 per cent, boosted by Germany's closely watched Ifo index of business optimism, which held steady in May, a stronger showing than the market had expected.
World stocks as measured by MSCI were up 0.2 percent, but only after hitting two-month lows during Monday's sell-off. The main driver behind Monday’s shake-out was the concern that a Greek debt default could put a new range of countries, including Italy, into trouble. Rating agency Moody’s underlined the issue again on Tuesday, saying that a Greek debt default would spread to others, putting Portugal and Ireland at risk of multi-notch credit downgrades.
The euro hovered above its two-month low against the dollar, with its rise capped by the contagion worries. It was up 0.2 percent on the day at $1.4078 (U.S.).
Crude futures rose more than a dollar after Goldman raised its 12-month price forecast for Brent to $130 a barrel from $107, and increased the end-2012 forecast to $140 from $120, citing global economic growth and tight OPEC spare capacity. Goldman also recommended buying December 2012 ICE Brent crude oil futures.
Echoing this view was Morgan Stanley, which raised its 2011 Brent crude forecast to $120 a barrel, from $100 previously, and lifted its 2012 target to $130, from $105.
Brent crude for July rose as high as $111.45 a barrel. U.S. crude, which hit an intraday peak of $98.92 a barrel, was up $1.10 at $98.80.
Gold rose to a two-week high as concerns about the spreading EU debt crisis fuelled safe haven buying. Spot gold hit $1,521.80 a troy ounce.
In Asia, the Nikkei gained 0.2 per cent while the Hang Seng was only 0.1 per cent higher.
The Shanghai Composite lost 0.3 per cent as Goldman trimmed its economic growth forecasts for China to 9.4 percent this year, from 10 percent previously and said inflation was not subsiding as quickly as expected. It predicted China’s annual inflation would peak at 5.6 percent in June, with average annual inflation hitting 4.7 percent in 2011. For 2012, Goldman reduced its economic growth forecasts for China to 9.2 percent, from an initial 9.5 percent.
