GLOBAL MARKETS-Stocks gain on US tax deal; euro up on Ireland

* World stocks rise, boosted by U.S. tax deal

* Euro gains on Ireland budget hopes

* Oil hits fresh 26-month high on dollar, cold snap

By Dominic Lau

LONDON, Dec 7 (BestGrowthStock) – Global equities advanced on
Tuesday, boosted by a compromise deal to extend expiring U.S.
tax cuts, while the euro rose on optimism that Irish lawmakers
will pass its toughest ever budget later in the day.

Copper prices gained, supported by Chinese buying and a
firmer euro, and oil prices rose to a fresh 26-month high on the
back of extra demand for heating fuel in parts of Europe and the
United States.

The single currency, however, remained vulnerable, with
European policymakers dithering over how to tackle the region’s
debt problem.

U.S. President Barack Obama unveiled a deal late on Monday
to renew tax cuts not just for the middle class but for also
wealthier Americans, as Republicans wanted. [ID:nN06211347]

The announcement was welcomed by the markets, with U.S.
stock index futures (SPc1: ) (DJc1: ) (NDc1: ) trading 0.7 to 1
percent higher and global stocks measured by MSCI All-Country
World Index (.MIWD00000PUS: ) adding 0.6 percent.
“The market is benefiting from the compromise in the U.S. on
the extension of the Bush tax cuts and to a lesser extent from
the probable voting (through) of the Irish (budget),” said
Philippe Gijsels, head of research at BNP Paribas Fortis Global

Europe’s FTSEurofirst 300 (.FTEU3: ) index rose 1.2 percent
and shares in euro zone peripheral economies also gained

The Irish benchmark (.ISEQ: ) advanced 1.5 percent, as Prime
Minister Brian Cowen is expected to get his fiscal plan through
parliament and avert the risk of a snap election.
[ID:nLDE6B51VW]. Last month, Dublin accepted an 85 billion euro
international bailout package.

The euro (EUR=: ) was up 0.4 percent at $1.3359.

“The euro is gaining support on optimism that the Irish
budget will be passed but I expect any rallies to be fleeting.
Structural weaknesses in the euro zone remain in place,” said
Lee Hardman, currency analyst at BTM-UFJ.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on ECB Bond buying: Graphic on asset returns since QE2 hints:
Graphic on the Reuters Tankan survey:


The single currency region’s policymakers have yet to show
financial markets that they can decisively resolve its debt
problem. Concerns remain that the debt crisis could spread from
Greece and Ireland to Portugal and possibly Spain.

After a five-hour meeting, the bloc’s finance ministers said
late on Monday they would be taking no new steps to tackle the
contagion, saying an existing emergency fund was sufficiently
big and that a proposal to issue euro zone bonds had not even
been broached. [ID:nLDE6B525H]

German Chancellor Angela Merkel, speaking in Berlin,
rebuffed calls for a bigger financial safety net or joint euro

Yields on sovereign bonds issued by euro zone peripheral
countries were mixed. Ireland’s 10-year bond yields
(IE10YT=TWEB: ) over benchmark German Bunds (DE10YT=TWEB: ) eased 3
basis points to 563 bps, while those on Spanish 10-year bonds
(ES10YT=TWEB: ) rose 7 bps to 241 bps.

The cost of protection against an Irish debt default
narrowed 8 bps to 520 bps, while Spain’s protection cost rose 2
bps to 319 bps.

Dealers said trade in the bonds was very thin.

“My gut feeling is that spreads are going to carry on
widening for a while yet,” said Chris Scicluna, deputy head of
economic research at Daiwa Capital Markets.

“Anyone in the market who is expecting someone, somewhere to
fund more support for the periphery, whether it be the EFSF or
the ECB — they’re going to be disappointed.”

The dollar was steady at 82.65 yen (JPY=: ) after slipping to
a three-week low against the Japanese currency earlier in the
session. The renewed strength in the yen dragged Japan’s Nikkei
225 (.N225: ) down 0.3 percent.

A Reuters poll showed the mood among Japanese manufacturers
darkened in late November and is expected to grow even gloomier
in the coming months as a strong yen and the global slowdown eat
into profits. [ID:nTOE6B600A]

In the commodity market, copper (CMCU3: ) rose 2.4 percent,
while oil prices (CLc1: ) gained 0.8 percent to trade above $90 a
(Additional reporting by Atul Prakash, Neal Armstrong and
William James in London, and Nick Trevethan in Singapore;
editing by Patrick Graham)

GLOBAL MARKETS-Stocks gain on US tax deal; euro up on Ireland