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)

Some traders booked profits on the euro’s slide on Thursday, while analysts said currency movements were aggravated due to thin volumes as U.S. markets were closed for the Independence Day holiday.

On Thursday, data showed U.S. employers cut a greater-than-expected 467,000 jobs in June, leading to heightened risk aversion on the back of pessimism about the recovery of the U.S. economy.

The bleak data pressured the euro and currencies perceived to be higher risk such as the Australian and New Zealand dollars, but the single European currency found its footing on Friday after selling subsided.

This kept the euro hovering at the $1.40 level, as some market players judged the sell-off in the euro — which knocked it from a near three-week high around $1.42 hit earlier in the week — may have been overdone.

“The big drift downwards that we saw (on Thursday) was simply stop-loss selling and that has now unwound,” said Robert Minikin, senior currency strategist at Standard Chartered in London.

He added a slight recovery in the euro versus the yen after a 2 percent fall on Thursday indicated lower risk aversion.

At 1217 GMT, the euro was at $1.4006, up 0.5 percent from U.S. levels at 2130 GMT. On Thursday, the pair fell as low as $1.3927, its lowest since June 25.

The euro also recovered against the yen to trade up half a percent at 134.39 yen. The Australian dollar climbed 0.7 percent against the dollar to $0.7983, while the New Zealand dollar rose 1 percent at $0.6333.

The dollar index, which tracks the dollar’s value against a basket of currencies, was up slightly at 80.290.

DIVERSIFICATION DEBATE Earlier in the session, the euro showed little reaction to data showing the euro zone Services Purchasing Managers Index (PMI) in June stood at 44.7, down from May’s seven-month high of 44.8.

Separate figures showed euro zone retail sales fell 0.4 percent on the month in May, more than forecasts for a 0.1 percent slide.

With the U.S. non-farm payrolls out of the way, investors will likely focus on a Group of Eight (G8) meeting on July 8-10 for any further debate on currency diversification plans.

A Japanese official said on Friday major countries should support the dollar as the key international currency at the summit, although emerging nations may discuss a new global reserve currency on the sidelines.

China has asked for a debate on a new global reserve currency when leaders from the G8 meet with the G5 emerging economies next week in Italy, a G8 source told Reuters.

“In the short term, moderate USD strength is likely to be in the global interest in terms of keeping long-term rates down and relieving what may emerge as commodity price pressures on inflation down the road,” Barclays Capital Research said in a note to clients.

“So while it may be early to sell USD, the fact that the (diversification) discussion has become so public suggests that USD weakness would accompany a global recovery as confidence is restored in the medium and long term,” the note said.

LONDON, July 3 (Reuters)

The dollar and the yen fell sharply against the euro on Friday as a rally in stocks around the world and fresh government aid for U.S. banks revived investor optimism and some risk appetite.

The euro also was recovering from a sell-off in the previous session as traders reassessed European Central Bank President Jean-Claude Trichet’s comments following the ECB’s decision to cut rates by a half percentage point to 2 percent.

“We have a much healthier risk appetite. That’s definitely helping the euro,” said Boris Schlossberg, director of currency research at GFT Forex in New York.

The market was re-thinking the implications of comments on Thursday by Trichet, who said any further ECB rate cuts will be postponed until March at the earliest and dismissed the idea of cutting rates close to zero, as the United States and Japan had, analysts said.

“Essentially, there’s going to be a floor on European rates…which will leave the euro with a moderately higher yield than the dollar and the yen,” Schlossberg said.

In early trading in New York, the euro gained 1.2 percent to $1.3314 , rebounding from a five-week low of $1.3025 hit on Thursday, according to Reuters data.

The euro rallied 2.1 percent to 120.52 yen , while the dollar gained 0.8 percent to 90.51 yen .

Risk appetite picked up on Friday with stocks rallying after Bank of America received a $20 billion government capital injection, overshadowing signs of more fallout from the credit crisis for the financial sector.

Those measures along with the prospect of another bank lending package in Britain eased investor concerns and boosted higher-yielding currencies such as the Australian and New Zealand dollars.

“The fact that we are now seeing the U.S. and even UK authorities looking at further help for the financial and banking system have provided some relief,” BNP Paribas senior currency strategist Ian Stannard said in London.

“While the equity market rebound continues, we’re likely to see euro/dollar maintain its current recovery,” he added.

The dollar lost more ground against the euro after a Treasury Department report showed investors sold U.S. Treasury bonds in November for the first time since August 2007, when the credit crunch began. Foreign selling of U.S. Treasuries amounted to $22.88 billion compared with inflows $32.87 billion the previous month.

Net capital inflows into the United States fell to $56.8 billion in November from a revised inflow of $260.6 billion in October, according to the report.

MORE AID

The aid for Bank of America followed the U.S. Senate’s decision to allow the second half of a $700 billion bank bailout program, handing an early political victory to President-elect Barack Obama, who will be sworn in next Tuesday.

Also, Democratic leaders in the House of Representatives have unveiled an $825 billion tax cut and spending bills they hope will help Obama reverse the economic slump, offsetting fears of soaring losses at the top three U.S. banks.

The Australian and New Zealand dollars gained 1.8 percent and 2 percent versus the U.S. currency respectively .

Sterling also surged, rising 2.1 percent to $1.4953.

Despite the boost from the news about government aid,worries about the banking sector were not far from investors’ minds, as Citigroup and Bank of America both reported a fourth quarter loss. Citigroup also said it would split into two operating units.

Meanwhile, Ireland nationalized its third largest lender, Anglo Irish Bank .

NEW YORK, Jan 16 (Reuters)

The current global credit crisis has created distortions that make many investments look bad. These same distortions have made leveraged multicurrency investments better.

Governments and central banks have lowered interest rates in numerous countries, including the U.S. This means that four currencies can be borrowed at Jyske Bank with low lending rates.

Those currencies are the U.S. and Singapore dollar, the Swiss franc, and the Japanese yen.

The rates, depending on the amount borrowed, are:

U.S. dollar: 4.125% to 4.875%
Swiss franc: 4.25% to 5%
Japanese yen: 2.5% to 3.25%
Singapore dollar: 3% to 3.75%

The multicurrency distortion is created because deposit rates on other currencies have risen.

Interesting deposit rates are on Turkish lira, Australian and New Zealand dollars, Icelandic króna, Hungarian forint, and South African rand.

These rates are:

Turkey: 14%
Australia: 6.875%
New Zealand: 8%
Iceland: 5.25%
Hungary: 7%
South Africa:10.25%

If one wished to leverage investments with the least risk (other than Forex), one could simply borrow the four currencies above and invest in deposit accounts in the six high-rate currencies.

Take, for example, an investment of $100,000 leveraged with a $200,000 loan of $50,000 borrowed in each of the four low-rate currencies. This raises $300,000 to invest.

The average loan rate (at the highest rate) is 4.21%…and $50,000 is invested in each of the six high-interest-rate currencies.

The average interest rate earned is 8.56%. The annual interest earned is $25,687.

The loan cost is $8,420. The income after loan payments is $17,267 or 17.26% on the $100,000 invested.

This is not bad. Such a portfolio is well diversified from a currency and geographic perspective. There is still a currency risk and investors should never leverage more than they can afford to lose.

Every investment has risk. The key to good multicurrency investing is to be sure that the premium you are paid for taking the risk is good.

In my opinion, 17.26% is more than a fair premium, but we can do even better with bonds, as I’ve been discussing in my multicurrency education service.

Gary Scott
For International Living

Source: Borrow Low, Deposit High

Our investment editors are fine tuning their crystal balls as we speak. In the meantime, The Sovereign Society consensus remains that hard assets and diversification outside the U.S. dollar and domestic financial markets, continue to make sense for the long term.

And when putting new money to work in the financial markets, it’s important to remember that – at all times – you have far more choices than most investors tend to imagine.

For instance, you don’t have to watch the value of your savings disappear.

Four Simple Cures for the Sinking Dollar

The U.S. dollar is in the worst bear market in its inglorious history. Yet you can own other currencies in the spot currency markets with account minimums of as little as a few hundred dollars. You can put your cash in the pound, euro, Swiss franc, Japanese yen, Canadian, Australian or New Zealand dollars without paying commissions or large spreads. You can collect more interest than you would in U.S. dollars at the same time.

You can also own FDIC-insured foreign currency CD’s, foreign currency funds that trade on stock exchanges, and forex options that you can trade from your own stock brokerage account. These are four simple, dollar-protection vehicles that are available to any investor – without needing a special account or high minimum net worth.

You don’t have to chain your equity portfolio to the U.S. market.

Even after yesterday’s rally, the Dow is down nearly 10% so far this year. Yet markets like Canada and Mexico are up. In fact over the last 10 years, the U.S. has not been a top-10 performing stock market once! If the biggest money is to be made where the greatest growth is, you must look to overseas markets to tap into that growth – and to find markets that offer value when the U.S. is overvalued.

You don’t always have to go long the market, especially when it’s overvalued.

How to Avoid an Overvalued Stock Market

Today, any retail investor can short the broad market – as well as some sectors of the market – with inverse ETFs. A few of these (in case you’re willing to take on a bit more risk to back up your very bearish sentiments) even allow you to short the broad market and sectors with leverage so that if the market falls 10%, you could stand to gain 20%.

You don’t have to let your portfolio get battered by market volatility without taking a few shots yourself.

The right types of equity options can pay well in volatile markets like these. Selling puts on stocks you’d like to own at a lower price can generate income for you now and possibly hand you the stock at a discount to the current price.

You don’t have to be overweighted in stocks during a stock bear market.

It is now easier than ever before to own commodities through ETFs – from gold and silver to oil and gas and now even agricultural commodities. This can offer a very low cost way to diversify your portfolio into hard assets without having to open a separate commodities account.

Don’t Place All Your Trust in CNBC

You don’t have to limit your financial information intake to the nightly news and business section of the paper.

You can add to it the views of cantankerous hard-money kooks; debt-leery, scaredy-cat economists; and curmudgeonly deep-value investors – like you’ll find here in the pages of the A-Letter. And perhaps, if we’re doing our job well, we might just help protect your assets in times of crisis and position yourself for significant profits as well.

That’s the business we’ve been trying to build at The Sovereign Society these past 10 years. Through the tech boom and bust, the housing euphoria and hysteria, the age of financial innovation and devastation, we’ve tried to keep a steady eye on the things we think matter.

We think a good balance sheet matters – for people, companies and nations. And we get worried about economies and markets when they become bloated with debt.

We think you should spend your money wisely: Buy shares in companies according to their earnings and earnings prospects, rather than the rumor mill.

We think the best opportunities don’t have borders. Invest in economies that are opening up their markets and becoming more competitive – while they’re still selling at reasonable values. It’s a great way to diversify your portfolio and capture some of the best growth opportunities in the world.

We think a promissory note backed by a vague promise is not a very secure store of value. So we think it is wise to exchange some of those scraps of paper for hard assets that may have a more enduring value.

We also think you have a right to financial privacy and to diversify your assets geographically as well as across asset classes and financial markets. So we try to introduce you to some of the best banking centers and financial institutions around the word.

Your Choice to Prosper

How much of what we offer is right for you? Well, that’s up to you. It’s your choice. That’s the whole point. Through our flagship publication, The Sovereign Individual, as well as through our other products and services – from Commodity Trend Alert to Forbidden Knowledge – we try to bring you what we think may be the best options in the world of global investments and offshore asset protection.

Which bits and pieces you decide to put into action is completely up to you – the real Sovereign Individual. For our part, we’ll commit to doing everything we can so that you consider us among your most able and trustworthy advisors.

In Wealth & Prosperity,
ERIKA NOLAN, Executive Director

P.S. Foreign equities from Hong Kong. Silver plays from the Sierra Nevada. AAA foreign bonds that protect you from the dropping dollar. Possibly the first bullish options on the financial sector. The few commodities worth grabbing at these levels. Special IRA investments that guarantee your principle, no matter what. You can find out how to buy all these portfolio-beating plays – safely – by joining us for our annual Total Wealth Symposium this May. However, seats are already filling up, so please reserve your spot today before we sell out.