Global stocks advance on earnings

By Daniel Bases

NEW YORK (BestGrowthStock) – Global shares prices rose on Tuesday as two big U.S. retailers reported better-than-expected earnings, while the euro rose for a second day after solid demand for European bond auctions eased worries about Europe’s sovereign debt problems.

Mergers and acquisition talk also boosted shares after mining giant BHP Billiton Ltd (BHP.AX: )(BLT.L: ) made an unsolicited $38.6 billion takeover bid for Potash Corp of Saskatchewan Inc (POT.TO: )(POT.N: ).

The yen, which hovers near 15-year highs against the greenback and seven-week peaks against the euro, gave up ground as investors converted safe-haven cash to take advantage of beaten down asset prices.

Spot gold prices edged up to seven-week highs while crude oil prices rose slightly after a sell-off on Monday, benefiting from the U.S. dollar’s weak performance.

U.S. Treasury prices fell sharply after rallying on Monday on speculative buying ahead of purchases by the U.S. Federal Reserve, which said it is reinvesting the proceeds of its mortgage bond holdings by buying U.S. Treasuries.

In the latest economic data, producer prices increased in July for the first time in four months, helping to allay concerns about deflation, but housing starts rose at a weaker rate than expected and permits fell to their lowest point in more than a year.

Dan Cook, senior market analyst at IG Markets in Chicago, said markets were in a wait-and-see mode after a risk-averse spell last week.

“The waters are way too murky at this point,” he said. “We still have a huge labor problem in this country and it’s going to be hard to get demand.”

In midday New York trade, the Dow Jones industrial average (.DJI: ) rose 132.38 points, or 1.28 percent, to 10,434.39. The Standard & Poor’s 500 Index (.SPX: ) gained 15.77 points, or 1.46 percent, to 1,095.15. The Nasdaq Composite Index (.IXIC: ) climbed 32.07 points, or 1.47 percent, at 2,213.94.

Wal-Mart Stores Inc (WMT.N: ), the world’s largest retailer, and Home Depot Inc (HD.N: ), the top U.S. home improvement chain, both beat analyst earnings estimates.

Wal-Mart’s shares rose 1.96 percent to $51.40 while Home Depot added 4.49 percent to $28.61.

Cook warned that profits driven by cost-cutting at Wal-Mart did not demonstrate underlying strength in the economy.

Potash, the world’s largest fertilizer maker, rejected the bid from BHP Billiton as “grossly inadequate,” though its shares surged and the bid helped boost the market.

“The increase in M&A shows CEO’s and CFO’s have more confidence in the outlook for the economy and are willing to start to deploy some of the high cash balances, which have built up in recent months,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

Potash’s U.S.-traded stock surged 25.4 percent to $140.68.

Shares in insurer Aegon (AEGN.AS: ) rose 6.76 percent after the European Union approved its recapitalization. That helped the FTSEurofirst 300 (.FTEU3: ) index of top European shares close at a one-week high, up 1.06 percent to 1,056.5490.

The Thomson Reuters global stock index (.TRXFLDGLPU: ) rose 1.19 percent and the MSCI All-Country World Index (.MIWD00000PUS: ) gained 1.25 percent.

Japan’s Nikkei 225 index (.N225: ) fell 0.4 percent to its lowest close in more than eight months on thin trading volumes.

SOLID AUCTION

Strong demand at Irish and Spanish bond auctions helped boost the euro. Ireland’s sale of 2014 and 2020 paper was viewed as a litmus test for investor appetite amid concerns about the cost of cleaning up the country’s banking sector.

The euro rose 0.42 percent to $1.2877 while the greenback rose 0.14 percent to 85.48 yen. Against a basket of currencies made up of its major trading partners, the U.S. dollar fell 0.39 percent (.DXY: ).

The bond auctions overshadowed the influential German ZEW report. Analyst and investor economic sentiment fell in August to its lowest level since April 2009 on concerns a faltering global economic recovery would hit Europe’s largest economy.

German government bonds fell with the 10-year yield pushing up from a record low set in the previous session after the debt sales eased funding worries in the euro zone periphery.

The 10-year Bund yield gained 3.6 basis points to 2.36 percent, off an all-time low around 2.31 percent plumbed on Monday.

Benchmark 10-year U.S. Treasuries fell 19/32 of point in price, pushing the yield up to 2.63 percent off Monday’s 17-month closing low of 2.57 percent.

Gold rose on the weaker dollar and expectations of further buying by investors concerned about the stuttering pace of recovery. Spot gold hit $1,228.45, its highest level since July 1, before slipping to $1,225.40 an ounce, up $2.55.

Oil rose from one-month lows but concerns linger that demand could fall. U.S. light sweet crude oil rose $0.99 to $76.40 per barrel.

(Additional reporting by Edward Krudy, Aiko Hayashi, Elaine Lies, Ian Chua, Anirban Nag, Brian Gorman, Michael Taylor; Editing by Leslie Adler)

Global stocks advance on earnings