But an early rally in U.S. stocks faded about midday in New York after Treasuries rose as investors swooped in to take advantage of sharp losses on Friday.

Oil rose to a 10-month high near $75 a barrel and other commodities also surged as optimism that major economies were pulling out of recession drove hopes of rebounding demand. .

Global stocks as measured by MSCI’s all-country world index <.MIWD00000PUS> rose 1.2 percent and was on track for a fifth straight session of gains.

The yen fell while the U.S. dollar slid against commodity currencies, such as the Australian and New Zealand dollars, as investors became more comfortable with riskier trades given the upbeat assessment of the world economy.

“Economic data is in favor of a stronger recovery than expected. We can be quite bullish on risky assets,” said Romain Boscher, head of equity management at Groupama Asset Management.

Euro zone industrial new orders in June rebounded 3.1 percent month-on-month, or more than expected, the European Union statistics office Eurostat said.

In the United States, economic activity improved again in July from extremely weak levels earlier this year, suggesting the recession is waning, a report from the Federal Reserve Bank of Chicago showed.

In addition, China’s latest data for July indicated that while growth was moderating after a strong second quarter, the recovery remained on track to achieve the government’s goal of 8 percent growth for the full year.

“The Chinese news was good and we had some positive news out of Europe as well,” said Rob Montefusco, a trader at Sucden Financial in London. “Technicals are pointing upwards.”

But U.S. stocks pared earlier gains. About 1 p.m. (1300 GMT), the Dow Jones industrial average <.DJI> was up 15.34 points, or 0.16 percent, at 9,521.30. The Standard & Poor’s 500 Index <.SPX> was up 1.11 points, or 0.11 percent, at 1,027.24. The Nasdaq Composite Index <.IXIC> was down 1.49 points, or 0.07 percent, at 2,019.41.

European shares hit their highest closing level in nearly 10 months, boosted by banks and miners.

The FTSEurofirst 300 <.FTEU3> index of top European shares ended 0.9 percent up at 975.19 points, the highest closing level since early November.

Banks were among top gainers, with DJ STOXX banking index <.SX7P> rising 1.8 percent.

Japan’s Nikkei average <.N225> jumped 3.4 percent, booosted by hopes for a global recovery and lifted by camera maker Canon Inc <7751.T> and other exporters.

Investors increased their risk-taking in the wake of stronger-than-expected U.S. existing home sales data and upbeat comments from Federal Reserve Chairman Ben Bernanke.

Copper prices rose to their highest in more than a week, helped by strong investment demand and bets the economic crisis is petering out.

Jesper Dannesbee, a senior commodities strategist at Societe General, said real demand has not improved that much it but will improve gradually through the year.

“This is follow through from Friday. There is a general appetite for risky assets driven by cheap money and lax monetary policy,” Dannesbee said.

Gold edged below $950 an ounce, under pressure from a firmer dollar, but remained rangebound as support from higher oil prices and investor demand prevented it falling further.

Spot gold was at $949.80 per ounce

U.S. Treasury debt prices rose, with the 30-year bond gaining more than a full point, as investors did some bargain hunting after Friday’s sharp losses and after the Federal Reserve bought government debt.

The benchmark 10-year U.S. Treasury note was up 19/32 in price to yield about 3.49 percent.

Benchmark euro zone government bonds ended flat as data bolstered the recovery view, but caution on its sustainability eased the selling pressure.

“The stock market has been the barometer for growth and potential inflation,” said Troy Buckner, managing principal of NuWave Investment Management in Morristown, New Jersey. “And yes. it’s been an extreme correlation between equity market movements and commodities, especially copper, aluminum and crude oil.”

But Buckner said that prices have climbed “too far too fast,” leading his firm to short crude and heating oil, while reducing long positions in copper and aluminum.

Euro zone government bonds ended flat as economic data bolstered the view the global economic recovery is under way but caution about the recovery eased selling pressure. Investors worried whether new U.S. debt issuance this week would be welcomed by buyers.

U.S. crude rose 51 cents to $74.40 a barrel.

Aug 24 (Reuters)

• Treasury Secretary Timothy Geithner said the U.S. regulatory system must impose constraints on companies using risky strategies that could cause them to collapse, posing danger to the financial system. In prepared testimony for the House Financial Services Committee, Geithner said rules must be in place to keep companies from causing “grave damage” to the economy, citing the failure to rein in excesses at American International Group Inc. (AIG) and other companies.

• Chicago Federal Reserve President Charles Evans said the U.S. economy should start growing by the end of the 2009 and that unemployment will begin reversing course in 2010, Reuters reported. Evans also said regulation will be closely studied after the crisis is over.

• The Bank of China posted a 59% drop in fourth-quarter profit, taking losses from U.S. mortgage investment write-downs and higher bad-loan provisions. “People knew Bank of China would underperform peers in 2008 because of the investment loss, but we are still surprised by how much it missed the estimate,” Liu Yinghua, a Shenzhen-based analyst at Ping An Securities Ltd. who plans to maintain her “neutral” rating on the stock, told Bloomberg. “There’s a silver lining though: it has a clean slate to start in 2009.”

• Goldman Sachs Group, Inc. (GS) said it plans to quickly pay back the $10 billion in TARP money it was given last October, an unnamed company source told The New York Times. Goldman was the largest recipient of TARP money and is paying a 5% interest to taxpayers for it.

• Inflation in the United Kingdom unexpectedly rose 3.2% in February from the year earlier. Food prices rose despite recession, but Bank of England Governor Mervyn King said the increase will likely be followed by a “sharp decline,” Bloomberg reported.

• The New York Stock Exchange, the Nasdaq Stock Market and BATS Exchange want regulators to adopt a “modified uptick rule” to curb abusive short selling. The top three U.S. exchanges said in a joint letter yesterday (Tuesday) to SEC Chairwoman Mary Schapiro, that the old uptick rule — which was removed in 2007-likely wouldn’t work in today’s fast-moving markets, Reuters reported.  Instead, they are pushing for a new rule that would only allow shorting at a price above the highest available bid.  The old rule allowed short sales anytime the last sale price was higher than the previous price.

• Lloyd’s of London Banking Group Plc (ADR:LYG), the world’s biggest insurance market, said insurers are poised to raise prices in 2009, as declining investment yields on U.S. Treasuries pressure results. Clients with windstorm damages, owners of airplanes and bank executives can expect to see higher rates as insurance companies were squeezed last year by the costliest hurricane season since 2005 and declines in the value of bonds held to back policies.”There will be a move in rates to make sure that underwriting in 2009 is profitable so that insurers have the funds to pay claims,”Chief Executive Officer Richard Ward, told Bloomberg in an interview yesterday (Tuesday).

• Copper futures ended lower yesterday (Tuesday) amid profit-taking from a rally that has seen prices climb more than 30% this year and hit their highest levels since early November. On Monday, data showed China’s implied copper demand surged almost 44% in February from January on the back of record high imports, fueled by both commercial and strategic stockpiling, Reuters reported.  Copper for May delivery shed 3.5 cents, or 1.9%, to close at $1.806 a pound in trading on the New York Mercantile Exchange’s COMEX.

• Mexico’s inflation rate slowed in early March, after consumer prices rose 6.25% in the 12 months through mid-February, the central bank said yesterday (Tuesday).  The government has frozen or trimmed some energy prices, including electricity rates, since January to shield households and businesses from the global economic slowdown.  The government is hoping reducing inflation will give the central bank more room to cut interest rates in order to boost the flagging economy, Reuters reported.

Source: Global Investment News Briefs Wednesday, March 25, 2009