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While you were sleeping: Stocks rise on recovery bets

Tuesday 2nd March 2010

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Stocks in the US and Europe rose overnight, bolstered by signs of continuing strength in the world’s biggest economy and optimism that Greek would receive help to bolster its finances.

At midday, the Dow Jones Industrial Average rose 0.75% and the Standard & Poor’s 500 gained 0.93%. The Nasdaq Composite rose 1.36%.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 1.18% to 19.27.

Among the advancers were AIG, which agreed to sell its Asian life insurance unit to Prudential of the UK Also heading higher were Ford Motor and Apple.

In Europe overnight, the Dow Jones Stoxx 600 rose 1.1% to 248.60.

Among national benchmarks, the UK ’s FTSE 100 rose 0.96%, Germany’s DAX 30 rose 2.06% and France ’s CAC 40 gained 1.64%.

Some of the biggest movers included National Bank of Greece, BHP Billiton, Rio Tinto and Lanxess.

In Athens today, European Union Monetary Affairs Commissioner Olli Rehn met with Prime Minister George Papandreou. The euro-zone members are expected to offer Greece a 25-billion euro financial assistance package.

The ASE Index in Greece surged to near a one-month high as it appeared the country’s government would receive help. The index’s 2.9% advance was paced by Greece’s three biggest banks.

U.S. stocks moved ahead after the Institute for Supply Management released data showing that the U.S. manufacturing sector expanded for a seventh month in February.

Eleven of 16 industries reported growth last month even though the overall expansion declined from a month earlier and failed to meet some expecctations.

The PMI registered 56.5%, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 58.4%. A reading above 50% indicates that the manufacturing economy is generally expanding.

“While new orders and production were not as strong as they were in January, they still show significant month-over-month growth.

“Additionally, the Employment Index is very encouraging, as it is up 2.8 percentage points for the month to 56.1%. This is the third consecutive month of growth in the Employment Index. With these levels of activity, manufacturers are seemingly willing to hire where they have orders to support higher employment,” the institute said.

“The manufacturing sector does continue to contribute to the US economic recovery, unlike, say, housing or employment,” Kenneth Kim, economist at Stone & McCarthy Research Associates in Princeton, New Jersey told Reuters.

“This is definitely a bright spot in the overall recovery; it's a confirmation that the economy is continuing to grow. What remains to be seen is how durable the recovery is.”

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.67% to 80.90.

In midday trading, the euro fell 0.8% to US$1.3523 after hitting a session low of $US1.3461, according to Reuters data, not far from a nine-month low of US$1.3442 last month.

The pound traded 1.7% lower at US$1.4993. At current prices, it's on track for its biggest one-day decline since late October 2009. It had tumbled as low as US$1.4781.

Against the yen, the dollar rose 0.5% to 89.27 yen.

The Canadian dollar rose, with the greenback falling 1% to C$1.0419 after data showed Canada's quarterly economic growth beat estimates.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.14% to 274.39.

The earthquake in Chile is expected to push the price of copper back to the US$8000 mark, despite assurances that output should return to normal levels soon.

Three-month copper on the London Metal Exchange rose to US$7365 a ton in official rings from US$7195 on Friday.

The metal used in power and construction earlier jumped as much as 5.6% to US$7600, its highest since January 20, and is in line for its biggest one-day increase in two weeks.

Oil gushed higher, mostly driven by the US dollar’s strength. US crude for April delivery rose 45 cents to US$80.11 by 1448 GMT. London Brent crude rose 51 cents to US$78.10.

US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange eased US$5.00 to US$1114.20 an ounce.

 

 

 

Businesswire.co.nz



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