Global stocks rise ahead of 2011, euro down

By Manuela Badawy

NEW YORK (BestGrowthStock) – Global stocks rose on Tuesday on upbeat corporate results and mergers amid bets of stronger global growth next year, while the euro fell (Read more about the trembling euro. ) on worries of more ratings downgrades for indebted euro zone countries.

Cold weather in Europe and the United States kept oil prices firm for the third straight session, while copper hit an all-time high, buoyed by supply disruption from Chile.

U.S. government bonds rose as some investors viewed current prices as attractive. Treasuries also benefited from demand for safe-haven assets amid fears of further debt problems among euro zone countries.

U.S. stock indexes hit new highs after topping key technical resistance levels. The S&P 500 has rallied 6.1 percent to two-year highs this month and was up around 22.5 percent from closing lows this year.

Analysts said equity markets were also lifted as fund managers reallocated cash to equities from fixed income and reduced cash positions.

“U.S. economic policy has improved confidence in the outlook for growth and corporate earnings next year, and investors are taking the view that bond markets are no longer the place to be,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

The Dow Jones industrial average (.DJI: ) closed up 55.71 points, or 0.49 percent, at 11,533.84. The Standard & Poor’s 500 Index (.SPX: ) rose 7.55 points, or 0.61 percent, at 1,254.63. The Nasdaq Composite Index (.IXIC: ) gained 18.05 points, or 0.68 percent, at 2,667.61.

“This is your Santa Claus rally. Everybody is coming in, you are clicking on all eight cylinders here,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

The front month futures contract for the Nikkei 225 stock index trading in Chicago rose 115 points to 10,420.

Global stocks measured by the MSCI All-Country World Index advanced 0.86 percent while the pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed up 1 percent at 1,144.19 points, the highest closing since late September 2008.

Meanwhile, the euro fell (Read more about the trembling euro. ) against the dollar as worries of more credit ratings downgrades for indebted European countries prompted traders to lighten up on the currency ahead of year end.

The most recent tremor came as Fitch Ratings said it could cut Greece’s foreign currency (Read more about trading foreign currency. rating. Earlier Moody’s Investors Service warned it may cut debt-ridden Portugal’s A1 rating by one or two notches after a review, citing weak growth prospects and high borrowing costs.

“The euro’s inability to sustain any rebound is a clear sign that the path of least resistance right now is downward,” said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. “If it weren’t for the thin market conditions, we’d probably be testing the $1.30 level more forcefully.”

The euro fell (Read more about the trembling euro. ) 0.21 percent to $1.3088 after trading as high as $1.3200 earlier. It fell to a fresh all-time low against the Swiss franc, at 1.2615 francs as euro zone concerns enhanced the safe-haven status of the franc.

Analysts said sentiment remained bearish on fears the debt crisis that has engulfed Greece and Ireland could put Portugal and Spain under more pressure early next year.

Spain sold 3.88 billion euros in treasury bills relatively easily Tuesday in its last funding of the year, but analysts said worries about whether some euro zone countries can service their debt will likely persist into 2011.

The dollar rose 0.12 percent to 80.722 against a basket of major currencies (.DXY: ).

U.S. BONDS, COMMODITIES PARE GAINS

The benchmark 10-year U.S. Treasury note was up 7/32, with the yield at 3.3128 percent. The 2-year U.S. Treasury note was down 1/32, with the yield at 0.6136 percent. The 30-year U.S. Treasury bond was up 10/32, with the yield at 4.4231 percent.

Oil rose 0.5 percent to settle at $89.82 a barrel, within sight of a high of $90.76 — the strongest for more than two years — hit earlier this month, on the back of cold weather in Europe and the United States, forecasts of a drop in inventories and expectation of stronger U.S. gasoline demand.

Copper prices rose 1.78 percent, their third day of gains, after a halt in shipments by the world’s No. 3 copper mine, Chile’s Collahusai. Spot gold prices rose 0.08 percent, to $1385.20.

(Additional reporting by Steven C. Johnson, Chuck Mikolajczak in New York, Editing by Chizu Nomiyama)

Global stocks rise ahead of 2011, euro down