Global stocks, euro rally on earnings and data

By Daniel Bases

NEW YORK (BestGrowthStock) – Global stocks rose on Thursday and the euro strengthened, backed by upbeat corporate results, better-than-expected U.S. housing data, and an improvement in European manufacturing and services activity.

Expectations before the release of European banks’ stress test results appeared to show an easing of concerns as the region’s bank stocks ranked among the best performers.

The increase in investors’ risk appetite prompted some selling of government bonds, while crude oil gained from a combination of improving data and a weaker U.S. dollar. Gold prices rose modestly, briefly edging back above $1,200.

“The companies that are doing well generally are the ones that have significant overseas revenues, or some kind of unique product,” said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

Earnings of UPS, the world’s largest package delivery company, soared 90 percent in the second quarter to $845 million. UPS (UPS.N: ) shares shot up 5.23 percent to $63.15.

Caterpillar, the world’s largest maker of construction and mining equipment, reported second-quarter profit (Read more your timing to make a profit.) of $707 million, or $1.09 a share, exceeding analysts’ expectations. Caterpillar(CAT.N: ) shares rose 1.69 percent to $68.

While Caterpillar raised its full-year outlook, citing sales growth in emerging market mining and energy companies, the bellwether company and Dow component cited “significant economic concerns,” including the risk of a double-dip recession in Europe and the United States.

The Dow Jones industrial average (.DJI: ) rose 201.77 points, or 1.99 percent, to close at 10,322.30. The Standard & Poor’s 500 Index (.SPX: ) gained 24.08 points, or 2.25 percent, to end at 1,093.67. The Nasdaq Composite Index (.IXIC: ) climbed 58.56 points, or 2.68 percent, to finish at 2,245.89.

The MSCI world equity index (.MIWD00000PUS: ) gained 1.85 percent and the Thomson Reuters global stock index (.TRXFLDGLPU: ) rose 1.92 percent. Tokyo’s Nikkei (.N225: ) fell for a fifth day, ending down 0.6 percent at 9,220.88 — its lowest close since July 2.

U.S. existing home sales fell less sharply than expected in June, but the supply of unsold homes rose to the highest amount in almost a year, the National Association of Realtors said.

A gloomy report detailing a bigger-than-expected increase in new U.S. weekly jobless claims and a drop in a private research group’s index of leading U.S. economic indicators were overshadowed.

INVESTORS SNAP UP EUROPEAN BANKS

In Europe, the pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares rose 2.11 percent to end at 1,039.35.

European financial shares rose, with the STOXX Europe 600 banking index (.SX7P: ) gaining 3.2 percent ahead of stress test

results for 91 European banks. The tests assess how they would cope with another economic slump and losses on government debt in the wake of the euro-zone sovereign debt crisis.

Standard Chartered (STAN.L: ), Barclays (BARC.L: ), Societe Generale (SOGN.PA: ) and Credit Agricole (CAGR.PA: ) jumped 4.1 to 5.6 percent.

Major listed lenders are expected to pass, while the tests may show the biggest problems lie with smaller, mainly unlisted players like Germany’s Landesbanks and Spain’s cajas.

“There is hope that the stress test will take away a lot of uncertainty surrounding European banks, but you have to take into account that the ECB would not publish these results if it would be a failure overall,” said Koen de Leus, an economist at KBC Securities.

DOLLAR FALLS ON HINTS OF MORE EASING

The dollar and U.S. Treasury bond yields came under pressure on the prospect of further U.S. monetary easing.

Federal Reserve Chairman Ben Bernanke said in testimony on Wednesday the Fed stood ready to ease monetary policy further if the budding U.S. economic recovery withers, describing the economic outlook as “unusually uncertain.”

The U.S. dollar index (Read more about the global trade. ) (.DXY: ) fell 0.97 percent against a basket of major trading-partner currencies to 82.585.

The euro rose 1.26 percent to $1.2889 after a survey showed the euro zone’s private sector surged in July.

European purchasing managers’ indexes showed private- sector business activity accelerated in July, surprising economists expecting a slowdown, and indicating third-quarter euro-zone growth of around 0.6 percent to 0.7 percent, analysts said.

“We’re seeing a struggle between perception and reality, as data from Europe has been better than anticipated while what we’ve seen from the U.S. has been quite soft,” said Dean Popplewell, chief strategist at FX brokerage OANDA in Toronto.

The greenback slipped lower against the yen, falling 0.18 percent to 86.90.

Two-year U.S. Treasury note yields briefly matched a record low of 0.556 percent hit the previous day, before rising back to 0.569 percent. The benchmark 10-year Treasury note fell 14/32 of a point in price, pushing the yield up to 2.93 percent.

In Europe, Bund futures slid 22 ticks to 128.69.

U.S. light sweet crude oil rose $2.74 a barrel to settle at an 11-week high of $79.30 per barrel, on both stronger-than-expected economic data, which lifted the equities markeet, and concerns that rough weather might threaten Gulf of Mexico production.

Spot gold prices rose $9.20 to $1,194.70 an ounce.

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(Additional reporting by Chuck Mikolajczak, Wanfeng Zhou, Harpreet Bhal, Natsuko Waki and Tricia Wright; Editing by Jan Paschal)

Global stocks, euro rally on earnings and data