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While you were sleeping: Greece relief in sight

Wednesday 10th February 2010

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Increasing expectations that the European Union was prepared to bolster Greece helped to propel a rally on Wall Street.

In early afternoon trading, the Dow Jones Industrial Average gained 2.26%, the Standard & Poor’s 500 Index was 2.07% higher and the Nasdaq Composite had risen 1.86%.

Advancing stocks included most of the airlines, Caterpillar, Coca-Cola as well as mining stocks. AMR jumped 8.7%, Delta rose 8.2% and Coca-Cola advanced 3.3%.

While earnings reports and improved corporate outlooks plus a few broker upgrades helped underpin a positive opening on Wall Street, it was the prospect of financial support for Greece that put investors in a buying mood.

Olli Rehn, who will become Europe;s economic affairs commissioner tomorrow, said the EU could offer “support (to Greece) in the broad sense of the word”, according to a Bloomberg report.

A German newspaper said that Chancellor Angela Merkel’s government was preparing an assistance package for Greece.

There also was a report that Jean-Claude Trichet, head of the European Central Bank, had left a meeting in Australia a day early to attend a special EU gathering on Thursday.

“The fact that Trichet is flying home early has really set the world alight,” David Keeble, head of fixed-income strategy in London at Credit Agricole CIB, told Bloomberg.
The Chicago Board Options Exchange Volatility Index, or VIX, fell 3.77% to 25.51.

As for Europe, the Dow Jones Stoxx 600 added 0.1% to 239.19. The FTSE 100 edged 0.38% higher, Germany’s DAX rose 0.24% and France’s CAC 40 advanced 0.15%. Talk of the Greek rescue efforts was accelerating at the end of the European trading day.

Among Europe’s better performing stocks were National Bank of Greece, Swatch Group and Elekta. UBS though shed 5.4% after the Swiss bank said withdrawals by wealthy clients accelerated in the fourth quarter. SAS and Ubisoft Entertainment also fell.

The euro recouped some recent losses against the US dollar, and gold and oil also advanced.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.63% to 79.80.

In midday New York trading, the euro was up 0.8% on the day at US$1.3760. Still, the euro has fallen nearly 9% from a 15-month high of US$1.5145 reached in late November.

The yen fell as much as slid 1.5%, the biggest intraday loss since December 3. The yen declined 0.3% to 89.48 per dollar, from 89.26.

Sterling fell as much as 0.7% to 1.1350 euro, after the U.K. trade deficit swelled in December to the widest in almost a year.

Australia’s dollar rose 1% to 87.37 US cents and increased 1.4% to 78.28 yen after the RBA signalled it may increase borrowing costs

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 1.1% to 264.42.
Spot gold hit a session high of US$1079.05 an ounce and was bid at US$1073.75 an ounce at 1625 GMT.

“The market is looking for upside potential on euro-dollar given the record short positions in the euro,” Saxo Bank senior manager Ole Hansen told Reuters. “Gold ... is in a much stronger position after the wash out on Friday.”

US crude prices for March delivery rose US$1.24 to US$73.13 a barrel by mid-morning. ICE Brent crude rose US$1.32 to US$71.43 by the same time, after hitting a high of US$71.57 a barrel.

Benchmark copper for March delivery rose US4.00 cents, or 1.37%, to US$295.30 per lb by 10:04 am EST (15:04 GMT) on the New York Mercantile Exchange's COMEX division.

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