Global stocks, euro gain on Greek rescue package

By Herbert Lash

NEW YORK (BestGrowthStock) – Global stocks rose on Monday after the euro zone agreed on a rescue package for Greece, but the euro and Greek borrowing costs pared initial gains when Germany raised a red flag over how the aid might be enacted.

A broadly stronger euro pushed gold to near four-month highs, and copper rose to a 20-month high before they both retreated on the perception the rally in the single currency was overdone.

A spokesman for the German Finance Ministry who said European leaders would need to activate any Greek aid — a sign of disagreement over how funds would be provided — took the edge off of enthusiasm for the weekend deal.

U.S. stocks (Read more about the stock market today. ) rose as expectations of solid first-quarter earnings spurred buying in financial, energy and industrial shares, driving the Dow to close above the 11,000 mark for the first time since September 2008. The S&P 500 finished less than 4 points from breaking through the 1,200 level.

European shares ended flat as mining shares fell with the retreat of metals’ prices from earlier highs.

Earlier, the safety net for Greece pushed Asian shares to 22-month highs.

The Australian dollar briefly rose to its highest level in five months and Greek government bond yields, which move in the opposite direction of their price, slid across the curve on news of the rescue package.

Euro zone ministers approved a 30 billion euro ($40.5 billion) aid package of loans, which Greece can tap if needed, with at least 10 billion euros also expected from the International Monetary Fund.

The euro was up 0.67 percent at $1.3586, after earlier hitting an almost one-month high, while the CBOE Volatility Index (.VIX: ), which measures the implied volatility of the S&P 500 Index (.SPX: ) and is widely watched as a gauge of investors’ fear, hit a 33-month intraday low.

“The package has the size and terms the market wanted to see and it came quicker than expected,” said Jens Nordvig, senior currency strategist at Nomura Securities in New York.

“There is still procedural uncertainty about activation and disbursement, but the bottom line is that we now have something concrete for the first time in this saga, and that should be important for markets.”

The Dow Jones industrial average (.DJI: ) closed up 8.62 points, or 0.08 percent, at 11,005.97. The Standard & Poor’s 500 Index (.SPX: ) gained 2.11 points, or 0.18 percent, at 1,196.48. The Nasdaq Composite Index (.IXIC: ) rose 3.82 points, or 0.16 percent, at 2,457.87.

“People fully expect that the earnings season is going to be very, very good, so people are trying to get in front of that,” said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

Shares of aluminum producer Alcoa Inc (AA.N: ), a Dow component, rose 1.3 percent as aluminum prices touched an 18-month high and ahead of its release of first-quarter earnings after the close of the market.

The company, which typically kicks off the earnings season, posted a narrower first-quarter loss as revenue rose and metal prices increased, but it took $295 million in charges for federal health care reforms and to close two smelters.

In Europe, the FTSEurofirst 300 (.FTEU3: ) index of top European shares closed flat at 1,101.44 points after rising to 1,105.08 — its highest in more than 18 months. Banks gained on news of the Greek deal but mining stocks fell as the rally in oil and metals turned negative.

The MSCI All-Country World Index (.MIWD00000PUS: ) advanced 0.4 percent to an 18-month high.

U.S. stocks (Read more about the stock market today. ) rose in anticipation that first-quarter results will be solid.

U.S. Treasury debt prices rose as bond investors questioned whether earnings would be strong enough to justify current stock prices. Lingering concerns about how the Greece bailout would be implemented and if it would work also lifted bonds.

The euro zone’s pledge to aid Athens failed to address longer-term challenges of solvency for debt-stricken Greece, said Mohamed El-Erian, chief executive and co-chief investment officer of top bond fund Pacific Investment Management Co.

The benchmark 10-year U.S. Treasury note was up 10/32 in price to yield 3.84 percent.

Oil prices fell toward $84 a barrel in seesaw trade, as high U.S. inventories outweighed early support from strong Chinese crude imports and a weak dollar.

U.S. crude for May delivery fell 58 cents to settle at $84.34 a barrel, after earlier rising to $85.71. London Brent crude fell 6 cents to settle at $84.77, moving to a premium above U.S. crude for the first time in months.

Chinese crude imports jumped 13.8 percent from the previous month and reached 4.95 million barrels a day, preliminary data released by the General Administration of Customs showed.

U.S. gold futures for June delivery settled at $1,162.20 an ounce, up 30 cents, in New York. Earlier during the session it hit a four-month peak at $1,168.70 an ounce.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) down 0.66 percent at 80.56.

Against the yen, the dollar was up 0.08 percent at 93.22.

(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, Chris Reese and Edward McAllister in New York; Harpreet Bhal, Ian Chua and William James in London; Editing by Leslie Adler)

Global stocks, euro gain on Greek rescue package