Global stocks, dollar gain as Greece rescue plan emerges

By Herbert Lash

NEW YORK (BestGrowthStock) – World stocks and the dollar gained on Thursday in a zig-zag session after a deal emerged to help Greece tackle its debt woes, removing some of the uncertainty lingering about a possible sovereign default.

European shares extended the week’s rally to a fourth day as stronger commodity and pharmaceutical shares outpaced a sharp decline in banks, pulled down by uncertainty over details over the rescue plan for Greece. On Wall Street, all three major indexes advanced, also buoyed by data that indicated the U.S. labor market may be healing.

European leaders agreed to provide financial aid to Greece, but details on the package, which leaked from multiple sources, were not expected until early next week when European Union finance ministers meet.

The euro extended losses versus the U.S. dollar, falling below $1.3600, as investors expressed concern that the plan may not be enough to pull Greece out from its fiscal crisis.

“The confusion over the bailout is leaving traders a little nervous. It seems now that the EU has made a decision to help Greece, but just what that help entails is still a mystery,” said Jimmy Yates, head of equities at CMC Markets.

The head of the Eurogroup, Jean-Claude Juncker, did say that any aid for Greece, would not be “money for nothing,” saying that aid would be conditioned on “drastic measures.”

Wall Street rose as the news on Greece relieved anxiety and on an improving U.S. labor market picture as first-time claims for jobless benefits fell more than expected. Copper futures rallied sharply on the jobless data and as Chinese inflation data bolstered improved economic sentiment.

The pan-European FTSEurofirst 300 index (.FTEU3: ) closed up 0.34 percent at 990.51 points.

Shortly after midday, the Dow Jones industrial average (.DJI: ) was up 80.64 points, or 0.80 percent, at 10,119.02. The Standard & Poor’s 500 Index (.SPX: ) was up 7.01 points, or 0.66 percent, at 1,075.14. The Nasdaq Composite Index (.IXIC: ) was up 25.36 points, or 1.18 percent, at 2,173.23.

The costs of protecting against a government debt default by Greece and Portugal rose as possible obstacles for the Greek rescue plan emerged.

Five-year credit default swaps on Greek government debt climbed to 352.0 basis points from 332.5 earlier in the session, according to data from CDS monitor CMA DataVision.

“There is still some nervousness. Markets could also perhaps realize more and more that there may be a bailout but it will come at a cost and the cost is that they really have to be tough on the fiscal side,” Klaus Wiener, head of research at Generali Investments, said of expectations of what an aid package for Greece may entail.

“When we look at the pillars of growth that we had over the last months, it was really fiscal spending. Now if countries have to go into reverse, that’s not boding well for the growth momentum,” he added.

The euro was down 0.50 percent at $1.3657. Against the yen, the dollar was down 0.26 percent at 89.74.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) up 0.14 percent at 80.138.

Oil rose above $75 a barrel after the International Energy Agency said global crude demand would grow by 120,000 barrels a day more than previously expected in 2010.

U.S. light sweet crude oil rose 58 cents to $75.10 a barrel.

Gold rose to a near one-week high above $1,090 an ounce. Spot gold prices rose $19.25 to $1,091.70.

The benchmark 10-year U.S. Treasury note rose 52/32 in price to yield 3.74 percent.

Stock Market Today

(Reporting by Leah Schnurr and Gertrude Chavez-Dreyfuss in New York; David Brett, Kirsten Donovan, George Matlock, Brian Gorman, Christopher Johnson and Jan Harvey in London; writing by Herbert Lash)

Global stocks, dollar gain as Greece rescue plan emerges