Global stocks rebound on U.S. data

By Walter Brandimarte

NEW YORK (BestGrowthStock) – Stocks rebounded on Wednesday on stronger-than-expected U.S. jobs and consumer sentiment data but lingering concerns about the European debt crisis weighed on the euro.

Prices of U.S. Treasuries and gold dropped as investors felt more comfortable taking on risk, one day after rising tensions in the Korea peninsula jolted global markets.

The relief came after data showed claims for U.S. unemployment benefits last week dropped to their lowest level in more than two years. Consumer sentiment also rose to its highest since June.

The data sent major U.S. stock indexes more than 1 percent higher and Asia looked set to rise as well, with Japan’s Nikkei futures traded in Chicago gaining 270 points to 10,145.00.

“Now you are getting good economic data, and you have a tug of war going on here between an improving economy and geopolitical events,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

“The market is trying to determine how much weight to put on each one of these events.”

Fears that the Irish debt crisis could spread into weaker members of the euro zone also inspired caution, with yield spreads of Portuguese and Spanish debt widening to fresh records even as Ireland unveiled a much-awaited austerity plan.

The 15 billion euro ($20 billion) plan for the next four years includes deep spending cuts and tax increases but also retains economic assumptions that many analysts deem unrealistic.

“There are still a lot of questions surrounding the bailout of Ireland and the budget; the government is in a limbo and we do not know if it will go through,” said Franz Wenzel, strategist with AXA Investment Managers in Paris.

Major U.S. stock indexes gained more than 1 percent.

The Dow Jones industrial average (.DJI: ) rose 150.91 points, or 1.37 percent, to 11,187.28, while the Standard & Poor’s 500 Index (.SPX: ) gained 17.62 points, or 1.49 percent, to 1,198.35. The Nasdaq Composite Index (.IXIC: ) climbed 48.17 points, or 1.93 percent, to 2,543.12.

MSCI’s All-Country World Index (.MIWD00000PUS: ) climbed 0.89 percent, while Europe’s FTSEurofirst 300 (.FTEU3: ) index of top shares rebounded from six-weeks lows to close 1.02 percent higher at 1,087.67.

The European stock market was also supported by data showing German business sentiment rose in November to its strongest since 1991.

EURO UNDER PRESSURE

The U.S. dollar seesawed against key currencies as trading was thin on the eve of the U.S. Thanksgiving holiday, when U.S. financial markets will be closed.

The U.S. Dollar Index (.DXY: ), which measures the performance of the greenback against a basket of major currencies, rose 0.1 percent after posting losses earlier on the session.

The euro initially strengthened on the better-than-expected U.S. data, but concerns about the euro zone debt crisis weighed later, sending the European single currency 0.28 percent lower to $1.3333.

“The driver is “still Irish and euro-zone concerns, and we will be talking about this well into 2011,” said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. “The market will continue to expect Portugal to apply (for aid) and then it will come down to Spain.”

U.S. Treasury prices fell, however, as stocks took the appeal off the government debt market. Prices of benchmark 10-year notes were down more than one point, sending yields up to 2.9157 percent.

Gold prices fell 0.18 percent to $1,374.20 an ounce. U.S. crude oil prices rose $2.61, or more than 3 percent, to $83.86 per barrel.

(Additional reporting by William James, Chuck Mikolajczak, Chris Reese and Julie Haviv; Editing by Kenneth Barry)

Global stocks rebound on U.S. data