GLOBAL MARKETS-Stocks gain on optimism; debt warnings hit euro

* Global stocks rise on mounting optimism about growth

* Euro falters against Swiss franc

* Oil peaks on supply strain, cold European weather
(Updates with European markets’ close, U.S. midday trade)

By Alina Selyukh

NEW YORK, Dec 22 (BestGrowthStock) – World stocks advanced on
Wednesday to two-year highs on growing optimism about global
economic growth while the euro slumped to near-lifetime lows
against the Swiss franc on Portugal and Greece debt warnings.

Oil prices topped $90 a barrel, hitting a 26-month peak, as
U.S. data showed bigger-than-expected drops in crude stockpiles
and a cold snap prolonged severe disruptions in Europe.

The euro recouped some losses versus the Swiss franc. But
the single currency remained near its weakest level since
launching in 1999 after Moody’s warned it may cut Portugal’s
credit rating and Fitch said it may downgrade Greece —
reminders that euro zone debt problems can still flare.

U.S. investor sentiment has been bullish approaching 2011,
with stocks on a tear in December as money managers reallocated
capital, anticipating improving economic data and robust
corporate earnings, according to a Reuters poll. For details,
see [ID:nLDE6BL0B2]

European shares hit a fresh 27-month high and U.S. equities
followed in kind, extending four days of gains that drove the
S&P 500 to levels not reached since before Lehman Brothers went
bankrupt two years ago.

With moves exaggerated by thin pre-holiday trade, Europe’s
FTSEurofirst 300 index (.FTEU3: ) tacked on 0.2 percent to close
at 1,147.61, boosted by a 9.1 percent surge in ARM Holdings
(ARM.L: ), which supplies microprocessors to Microsoft
(MSFT.O: ).The software giant is developing a new version of its
operating system.

On Wall Street, the Dow Jones industrial average (.DJI: )
gained 27.36 points, or 0.24 percent, to 11,560.52. The
Standard & Poor’s 500 Index (.SPX: ) added 4.02 points, or 0.32
percent, to 1,258.62. The Nasdaq Composite Index (.IXIC: ) rose
4.11 points, or 0.15 percent, to 2,671.72.

Financial stocks continued to drive the U.S. rally after
lagging through the autumn. Bank of American Corp (BAC.N: ) rose
3.4 percent to $13.42, while JP Morgan Chase & Co (JPM.N: )
climbed 3.3 percent to $42.36.

Global stocks measured by the MSCI all-country world index
(.MIWD00000PUS: ) edged up 0.14 percent, nearing a 26-month high
hit last month.

Traders shrugged off the latest data showing U.S. consumer
spending was softer than previously estimated and third-quarter
U.S. economic growth was also below forecasts but higher than
earlier estimates. [ID:nN22291718]

“The more recent data suggests we’re seeing reasonably
healthy retail sales growth, pretty healthy investment
spending, and some growth in employment. So maybe the core
growth or final sales growth is starting to accelerate in the
fourth quarter,” said Zach Pandl, economist at Nomura
Securities International in New York.

U.S. Treasury prices trimmed gains in light trading after
the Federal Reserve completed its last purchases until next
week in the effort to spur U.S. economic recovery. The
benchmark 10-year U.S. Treasury note (US10YT=RR: ) declined 6/32
points in price, yielding 3.3265 percent.

“Investors will be happy to see the market close off the
year with a decent gain,” said Richard Jeffrey chief
investment officer at Cazenove Capital Management. “There’s a
lot of macro information today that may influence people’s
thinking on 2011.”


The ratings warnings on smaller debt-laden euro zone
countries sent the single currency stumbling not only against
the franc, but also against the generally steady dollar.

The euro (EUR=: ) nudged lower against the dollar, down 0.08
percent at $1.3085. The dollar held flat against a basket of
major currencies (.DXY: ) and declined 0.23 percent against the
Japanese yen (JPY=: ) at 83.54.

The euro got some overall respite, however, after a
Portuguese newspaper reported that China was ready to buy 4
billion to 5 billion euros worth of Portuguese sovereign debt.
[ID:nLDE6BL0MW] Beijing offered no comment on the report,
leaving investors in the bond market unconvinced and sovereign
bonds of smaller European countries under pressure.

“There’s been no clarity on what European Union leaders
will do to deal with the debt crisis,” said Investec economist
Philip Shaw. “That uncertainty, coupled with the threat of
downgrades to various peripheral countries, has led to more
spread widening and a weaker euro.”

The credit rating warnings and weakening dollar helped
boost the appeal of gold as a safe-haven asset. Gold (XAU=: )
firmed to $1387.20 an ounce, building on three straight
sessions of gains. The price was also underpinned after the
International Monetary Fund said it completed a massive gold
reserve sale that began a year ago. [ID:nLDE6BL0RC]

Oil futures (CLc1: ) rose 0.5 percent, or 47 cents, to $90.29
per barrel, boosted by unusually cold weather in parts of the
northern hemisphere and a large decline in weekly crude stocks,
surpassing expectations. [ID:nWEN4800]
(Additional reporting by Naomi Tajitsu and Jan Harvey in
London, Karen Brettell, Edward Krudy and Wanfeng Zhou in New
York; editing by Jeffrey Benkoe)

GLOBAL MARKETS-Stocks gain on optimism; debt warnings hit euro