Euro extends rally, commodities drive stock gains

By Al Yoon

NEW YORK (BestGrowthStock) – European efforts to ease Greece’s debt crisis and a Greek bond sale lifted the euro on Monday, clearing a path for energy and mining stocks that benefit from a weaker dollar.

Expectations a Friday report will show U.S. businesses hired for the first month since November also buoyed stocks.

Strength in world equities followed a European Union, European Central Bank and International Monetary Fund accord to provide a safety net to Greece and persuade markets it and other peripheral euro zone economies will not default on bonds.

On Monday, Greece tapped the capital markets for the first time since it gained the fiscal support last week.

The euro, which has been battered by the crisis, rose about a half percent against the dollar to $1.3478. It also gained against the Swiss franc, Swedish crown, Japanese yen and British pound.

“Greece’s move is definitely lifting some concerns about the financial condition of the region, but we are not out of the woods yet, and the market can change its direction any time,” said Jon Canally, economist at LPL Financial in Boston.

Without fresh impetus on Monday, euro gains represented “follow through” from a rally on Friday, said Michael Woolfolk, a senior strategist at BNY Mellon in New York.

The Greek seven-year bond raised 5 billion euros at 5.9 percent, about twice the yield offered on German debt. While completed, it drew significantly less demand than previous 10-year Greek bonds due to the shorter maturity, thin markets and concern Greece’s fiscal problems could drag on.

U.S. government debt prices declined slightly as improvements in the U.S. economy and brightening prospects for Greece lessened the safe haven appeal of Treasuries. Benchmark 10-year Treasury yields rose 0.02 percentage point to 3.87 percent.

The removal of immediate worries about Greece allowed global stock markets to focus elsewhere. U.S. stocks (Read more about the stock market today. ) rose as mining and energy companies advanced on dollar weakness. Investors also purchased strong-performing shares to improve portfolio statistics for quarter end.

In the United States, the Dow Jones industrial average (.DJI: ) rose 45.50 points, or 0.42 percent, to 10,895.86. The Standard & Poor’s 500 Index (.SPX: ) gained 6.63 points, or 0.57 percent, to 1,173.22 and the Nasdaq Composite Index (.IXIC: ) increased 9.23 points, or 0.39 percent, to 2,404.36.

Stocks firmed as data showed U.S. consumer spending rose in February for a fifth straight month, though stagnant incomes pushed savings to their lowest level since October 2008. Many investors also peered ahead to the U.S. March employment report on Friday, in which economists forecast businesses added some 190,000 jobs in the month.

Should the data meet those expectations it would mark the best month of job creation in two years. Markets will be closed on Friday for the Good Friday holiday.

Major energy companies shares jumped with the price of oil. Commodities also surged as the dollar’s weakness buoyed their outlook, with copper prices among biggest gainers.

Copper for May delivery on the New York Mercantile Exchange’s COMEX division surged 13.25 cents, or 3.9 percent, to settle at $3.5355 per lb — the highest closing level for a third-position contract since late August 2008. Low inventory also supported copper prices.

The S&P energy index (.GSPE: ) gained 1.8 percent as oil futures surged more than 3 percent to $82.48 a barrel. Dollar-denominated oil and metals become less expensive for holders of other currencies when the dollar falls.

Exxon Mobil Corp (XOM.N: ) gained 1.14 percent to $67.30. Among miners, shares of Newmont Mining (NEM.N: ) climbed 2 percent to $50.37.

European shares ended higher, with miners there also supported by strong metals prices, offsetting weaker banks. Vodafone (VOD.L: ) rose on reports of talks with U.S. partner Verizon over dividend payments.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed up 0.16 percent at 1,079.24 points.

“We’re now getting to the point where people are saying we have had some terrific gains and maybe we have come a little bit too far too soon and we could see some consolidation,” said Joshua Raymond, market strategist at City Index.

Gains in the United States and emerging markets lifted MSCI’s all-country world index (.MIWD00000PUS: ) 0.66 percent, closing in on its highest level since mid-January. Earlier, Japan’s Nikkei average (.N225: ) dipped 0.1 percent on Monday, backing off an 18-month high hit last week.

Elsewhere in currencies, the U.S. dollar slipped against a basket of major trading-partner currencies, with the U.S. dollar index (Read more about the global trade. ) (.DXY: ) off 0.5 percent at 81.251. The dollar was little changed at 92.46 yen.

Stock Research Tools

(Additional reporting by Kirsten Donovan, Tamawa Desai and George Matlock in London, and Steven C. Johnson, Emily Flitter, Angela Moon, Caroline Valetkevitch, Vivianne Rodrigues, Ellis Mnyandu and Chris Kelly in New York; Editing by Andrew Hay)

Euro extends rally, commodities drive stock gains