Stocks turn mixed after Thursday's big rally (AP)

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Global stocks at two-week high, rally may stall (Reuters)

LONDON (Reuters) – Global shares edged up to their highest in nearly two weeks on Tuesday, but the rally looked to be running out of steam on the back of concerns over Europe's debt troubles and U.S. growth.

World stock markets, as measured by MSCI, were up 0.17 percent, but European markets were mixed, with Germany's DAX index down half a percent and U.S. futures pointed to a weaker open for Wall Street.

With big-ticket data like U.S. job numbers due later this week, many investors remain uncertain about a recovery in the world's largest economy, leaving risk for a correction in markets still trading at low holiday volumes.

Tepid demand at a bond tender in Italy also did little to quell renewed concerns over the euro zone's debt problems and a banking sector which the IMF has warned should be recapitalized to deal with the fallout of three years of crisis.

"With consumer confidence, the (U.S) ADP jobs report, ISM Manufacturing, jobless claims and nonfarm payrolls report all due in the coming days, there is going to be a lot of nervousness around," said Ben Potter, strategist at IG Markets.

"The market could also be seen as vulnerable given it has rallied ahead of these big economic reports. We think a lot of participants will be employing a 'wait and see' approach as we navigate through the next few days."

The main index of European shares rose 0.8 percent, tracking gains in Asia, but that was largely due to London advancing 2.4 percent as investors caught up with moves elsewhere after a domestic holiday.

Investors are awaiting minutes from the Federal Reserve's last committee meeting later on Tuesday which could offer more clues on divisions among board members over further stimulus measures.

EURO PROBLEMS

While the uncertain recovery in the U.S. dominated trade, euro zone worries remained on investors' radar and were likely to discourage them to betting big on riskier assets.

An Italian bond auction drew weak demand from investors, although yields fell sharply compared to the previous auction in July, largely due to some 43 billion euros in bond purchases by the European Central Bank since.

Traders said the ECB was buying Italian government bonds in the secondary market on Tuesday, to drive borrowing costs even lower, as it beefs up its attempt to ringfence the euro zone's third-largest economy from the debt crisis.

While the ECB's efforts lent some support to the euro, it is unlikely to lift broader concerns that the risk of contagion could still engulf larger euro zone economies like France.

The premium investors charge to hold Italian bonds over German ones rose to 300 bps, its highest since the ECB stepped in to the market, on Monday.

These concerns have made investors such as U.S. money market funds reduce exposure to European banks and pushed their credit default swap spreads higher.

The Itraxx European senior financials index has pushed beyond the peaks seen during the last crisis, and at 247 basis points the spread is starting to reflect credit ratings that are not in line with their current ones.

"I don't think many people will wholeheartedly buy into the recovery in equities," said Niels Christensen, currency strategist at Nordea in Copenhagen.

"People going long on euro/dollar are very quick to liquidate, and to take profit on those positions, so it will be tough for the euro to rise beyond $1.4570," he said, referring to a high hit in early July.

The euro was down 0.7 percent against the dollar at $1.4412, off a session low of $1.4399 after the Italian bond auction. It also eased against the Swiss franc.

The franc, hit by Switzerland's efforts to weaken it in the past month, traded lower against the dollar, at 0.8195 francs, hovering near a five-week low touched on Monday.

Spot gold stabilized around $1,793 per ounce levels, up 0.3 percent, and after falling by nearly seven percent in about a week. It hit a record $1,911 last week.

U.S. Treasuries rose, unwinding some of the sharp losses seen in the previous session as investors braced for the Federal Reserve meeting minutes for clues on how the policy-setting panel view the economic outlook.

(Additional reporting by Atul Prakash and Naomi Tajitsu in London)

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World stocks rally on Fed hopes, dollar down (Reuters)

NEW YORK (Reuters) – World stocks jumped and the dollar fell on Tuesday as dismal U.S. data spurred hopes the Federal Reserve may offer more economic stimulus.

Financial markets have been in turmoil over the past month on concerns the United States may be headed for another recession and as the euro zone's debt crisis has worsened.

World stocks, as measured by the MSCI All-Country World Index, and Wall Street's benchmark Standard & Poor's 500 index are on track for their worst month since 2008, after the collapse of Lehman Brothers.

The MSCI All-Country World Index jumped 1.7 percent, while the S&P 500 gained more than 2 percent. Data from China showing factory sentiment was not as weak as expected helped boost world shares overnight.

In the latest disappointing news on the U.S. economy, factory output in the U.S. central Atlantic region contracted again in August and new home sales fell to a five-month low in July.

Equity investors are taking a "bad news is good news" approach, though, betting that the data may spur more action from the Fed. Stocks staged a rally in the fourth quarter of last year, when the Fed announced a $600 billion bond-buying program.

"People are putting money on the Fed saying something and buying stocks ahead," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.

There is concern, however, that investors are overly optimistic, and many strategists have noted the U.S. economy has improved since a year ago.

Speculation is widespread in financial markets that Fed Chairman Ben Bernanke will use his Friday speech at a central banker conference in Jackson Hole, Wyoming, to signal a new monetary offensive to support a faltering U.S. economy.

Bernanke, however, is most likely to outline gradualist measures, which would disappoint those looking for a big bang approach such as a fresh round of bond buying, known as QE3.

"The market is really geared up for the idea of additional asset purchases to at least be put on the table when Bernanke speaks," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "I'm not sure it will play out that way, but that's what the market is betting on now."

The Fed chairman looks set to discuss ways the central bank could tweak the Fed's balance sheet as a means to put further pressure on medium and long-term interest rates and anchor them at low levels. These could be implemented in September and October at coming Fed meetings.

On Wall Street, the Dow Jones industrial average was up 198.71 points, or 1.83 percent, at 11,053.36. The Standard & Poor's 500 Index was up 23.00 points, or 2.05 percent, at 1,146.82. The Nasdaq Composite Index was up 62.63 points, or 2.67 percent, at 2,408.01.

Gold prices fell 2 percent, sharply retreating from a record of more than $1,900 an ounce in Asia trading, as a broad recovery in equity markets and riskier assets took the steam out of a bullion surge that many saw as overdone.

Spot gold was down 2.4 percent at $1,851.29 an ounce

Stimulus measures like those previously undertaken by the Fed increase the amount of dollars in the system, driving down the currency's value, which helps U.S. exports, and prompting investors to seek higher returns elsewhere.

The dollar edged down 0.3 percent against a basket of currencies.

Bonds, which normally move inversely to stocks, saw some light buying after the weak data on speculation the Fed will act to spur the economy, but the strength in equities appeared to be keeping a lid on their rally.

The benchmark U.S. 10-year note was up 2/32 in price, its yield edging down to 2.106 percent from 2.11 percent late on Monday.

In the oil market, prices bounced in choppy trading, supported early by the manufacturing data from China and Europe. Brent October crude rose 71 cents to $109.07 a barrel.

BANK BORROWING COSTS HIT

Ongoing fears of European banks' exposure to heavily indebted European nations like Greece and Italy are making it more expensive for banks to fund themselves in short-term funding markets.

U.S. bank debt costs are also being pressured in unsecured bond markets. The cost for interbank borrowing -- measured by three-month Libor, or the London interbank offered rate -- rose to 0.31178 percentage point on Tuesday.

European banks are facing higher dollar funding costs as U.S. money fund investors, nervous about exposures to peripheral euro zone countries, reduce the length and amount of loans to banks in the region.

The Thomson Reuters Peripheral Euro Zone Banks Index ended down 1.1 percent at 51.61 and is down 25 percent year-to-date.

(Reporting by Caroline Valetkevitch; Additional reporting by Ashley Lau, Steve Johnson, Frank Tang and Emily Flitter in New York and Jan Harvey in London; Editing by Leslie Adler)

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Stocks rise for second day; Exxon leads Dow (AP)

NEW YORK – Exxon Mobil Corp. and other energy companies led stocks higher Tuesday as major indexes rose for the second day in a row.

Exxon rose the most of the 30 stocks in the Dow Jones industrial average, gaining 3.2 percent. Chevron Corp. was also up more than 3 percent. Energy stocks got a push upward from a 2 percent increase in the price of oil, to $85 a barrel.

Bank of America Corp. sank 2.7 percent, the most of any Dow company. The stock has lost 36 percent this month as investors become increasingly worried about the bank's ability to raise capital and its liabilities related to subprime mortgages. The latest disappointment came Monday with news that BofA will not sell its 10 percent stake in China Construction Bank.

Stocks rose broadly despite another weak report on the U.S. housing market. The Commerce Department said the number of people who bought new homes in July fell 1 percent, the fourth monthly drop. New home sales are on track to have their worst year in half a century.

In early afternoon trading, the Dow rose 208 points, or 2 percent, to 11,063. The Dow also rose 200 points in morning trading Monday, but ended with a gain of just 37.

The S&P 500 index rose 24 points, or 2.1 percent, to 1,148. The Nasdaq rose 58 points, or 2.4 percent, to 2,403.

James Paulsen, chief investment strategist at Wells Capital Management, said Tuesday's gains seemed fragile because stock trading has been so volatile. "But at least we're going up and down, not just down," Paulsen said. "Every day this goes on you get the sense that maybe we've found the bottom."

Major indexes eked out minor gains Monday following a four-week losing streak. During that time there were four days in a row in which the Dow Jones industrial average moved by at least 400 points, the first time that has happened in the Dow's 115-year history.

The S&P 500 index has dropped 16 percent since July 22 and 13 percent this month as investors worry about the U.S. economy softening and a flare-up in Europe's debt crisis. The broad market measure is on track for its worst August since the Asian financial crisis rattled world markets in 1998.

One measure of the market's swings, the Chicago Board of Options Exchange's volatility index, has soared 54 percent this month. That's a sign investors are anticipating more wide swings in the S&P 500, the stock index most money managers use a benchmark. The index fell 8 percent Tuesday to 39 as concerns about future turbulence eased.

UBS rose 4 percent. The Swiss bank said it planned on cutting 3,500 jobs worldwide in the hope of saving $2.5 billion by the end of next year. UBS's stock has dropped 20 percent this year.

H.J. Heinz Co. fell 3 percent after the world's largest ketchup maker said profits fell 6 percent in the most recent quarter. Heinz also lowered its earnings estimate for the year.

Better reports on manufacturing in Europe and China lifted world markets. Hong Kong's Hang Seng rose 3 percent and Germany's DAX rose more than 1 percent. Investors are also hoping Fed Chairman Ben Bernanke will announce some kind of assistance Friday for the U.S. economy.

There's still fear that the U.S. could slip into another recession. Investors will be watching Bernanke's speech at the Fed's annual retreat in Jackson Hole, Wyo., on Friday. It was at the same conference a year ago that Fed Chairman Ben Bernanke made the case for buying Treasury bonds to push interest rates lower and spur spending. That $600 billion bond-buying program was credited with giving stock markets a lift but it ended in June.

The yield on the 10-year Treasury note edged up to 2.11 percent from 2.10 percent late Monday. The yield fell below 2 percent last week, its lowest on record, as investors sought refuge from turmoil in the stock market.

Gold, which edged above $1,900 Monday, fell $33 to $1,859 an ounce. Gold has jumped 15 percent this month to new highs as nervous investors shift money into hard assets.

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Global stocks falter, oil gains on gasoline (Reuters)

NEW YORK (Reuters) – World equities faltered on Wednesday, dashed by a downturn in U.S. technology stocks and a return of investor skittishness after Swiss measures to halt the franc's rise frustrated investors seeking harsher steps.

The turn in sentiment was marked by a sharp reversal in the U.S. Treasury market, where prices for the benchmark 10-year note shot up, pushing its yield down to 2.18 percent. Gold prices also reversed course and turned lower.

The U.S. dollar, meanwhile, dropped across the board, hurt by sharp losses versus the franc, which strengthened even after the Swiss National Bank announced a series of measures to halt the currency's steady appreciation.

The plight of the franc was part of a larger battle over the European debt crisis, with the Swiss currency a beneficiary of investors seeking safety in a currency other than the euro.

"You're pitting an economy with less than 8 million people (Switzerland) against the euro zone, with a population of 338 million," said Greg Anderson, senior currency strategist at Citigroup.

"If euro zone investors want to buy the Swiss franc because they don't feel safe, there's nothing the Swiss can do about it," he said.

The euro tumbled more than 2 percent against the franc in volatile trade to hit a low of 1.12248 francs as safe-haven demand for the Swiss currency resumed. The single currency was last at 1.14060 francs, down 0.5 percent.

The dollar fell against a basket of major currencies, with the U.S. Dollar Index off 0.42 percent at 73.696.

U.S. stocks turned south at midday. The Nasdaq fell 1 percent and shares of Dell Inc slumped 10 percent a day after the world's second-largest PC maker slashed its full-year revenue forecast, citing weak technology spending.

Shortly after 1 p.m. EDT, the Dow Jones industrial average was down 34.21 points, or 0.30 percent, at 11,371.72. The Standard & Poor's 500 Index was down 2.08 points, or 0.17 percent, at 1,190.68. The Nasdaq Composite Index was down 19.53 points, or 0.77 percent, at 2,503.92.

Global stocks, as measured by MSCI's all-country world equity index, gained 0.1 percent.

The sharp turn in markets came after European equities closed at their highest level in more than a week as investors trained their sights on company earnings and attractive equity valuations following a dismal opening. A Franco-German meeting on Tuesday failed to appease investors.

"Volatility remains the fundamental theme of the markets at the moment. But there is still a lot to be positive about, given where valuations are and as balance sheets look very healthy and companies are awash with cash," said Henk Potts, equity strategist at Barclays Wealth.

Oil jumped to above $111 a barrel, the highest in almost two weeks, on a larger-than-expected decline in U.S. gasoline supplies.

The U.S. government's Energy Information Administration confirmed an industry report of a larger-than-expected drop in gasoline supplies. But it also showed a surprise increase in crude inventories.

Brent crude rose 2.0 percent to $111.31 a barrel, while U.S. light sweet crude oil rose 96 cents to $87.61 a barrel.

Spot gold prices fell 20 cents to $1,784.80 an ounce.

(Reporting by Gertrude Chavez-Dreyfuss, Karen Brettell and Rodrigo Campos in New York; Jessica Mortimer, Ana Nicolaci da Costa, Alex Lawler and Amanda Cooper in London; Writing by Herbert Lash; Editing by Dan Grebler)

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Stocks rise after $19 billion acquisition spree (AP)

NEW YORK – Stocks rose for a third straight day Monday after Google and other companies announced acquisitions totaling more than $19 billion. The return of "Merger Monday" on Wall Street made investors more optimistic about the future. So did a report that showed Japan's economy shrank less than feared following the March 11 earthquake and tsunami. That helped temporarily ease worries about the U.S. economy.

The Dow Jones industrial average rose 113 points, or 1 percent to 11,383 at 12:02 p.m. in New York. The Standard & Poor's 500 index rose 14, or 1.2 percent, to 1,193. The Nasdaq composite index rose 19, or 0.8 percent, to 2,527.

Markets may have stabilized, but financial analysts warn investors not to assume that stocks have fully settled down after last week's swings. The S&P 500 rose or fell by at least 4 percent for four straight days, something that hasn't happened since November 2008. The first-ever downgrade of the U.S. credit rating triggered the volatility. It was exacerbated by concerns that Europe's debt problems are worsening and that the U.S. economy is weakening.

"You might have these moments of quiet, but the debt crisis in Europe did not go away," said John Hailer, chief executive officer of Natixis Global Asset Management, which manages more than $700 billion under the Loomis Sayles and other brands. "Our issues with the debt, with what our tax policy is going to be going forward, our unemployment did not go away."

"We are probably going to have to look at some very different levels of volatility than what a lot of investors grew up with over the last 25 to 30 years," he said.

Hailer said investors seeking protection from volatility have poured dollars into mutual funds that bet on falling stock prices and use other alternative strategies. About 20 percent of all new investment dollars coming into Natixis are for such funds, up from 8 percent in 2009.

More swings could be on the way this week. The leaders of France and Germany meet Tuesday to discuss Europe's debt problems. Spain and other countries have borrowed so much that they may need help to repay their bills. Investors on Tuesday will get an update on how Spain's economy did during the second quarter.

On Monday, a spate of corporate deals dominated the news. The biggest was Google Inc.'s $12.5 billion cash purchase of wireless phone maker Motorola Mobility Holdings Inc. It is also the biggest acquisition in Google's history. No. 2 was its $3.2 billion purchase of DoubleClick in 2008. Motorola Mobility's stock jumped percent 56 percent. Google fell 2.4 percent.

Among other deals: Time Warner Cable Inc. said it will pay $3 billion in cash for Insight Communications Co., which has more than 750,000 cable customers in the Midwest. Agribusiness conglomerate Cargill said it will buy Dutch animal nutrition company Provimi for $2.16 billion. And in the energy industry, offshore driller Transocean Ltd. said it will buy Aker Drilling of Norway for $1.43 billion in cash.

Companies across the United States have accumulated a record amount of cash since the recession ended. They have increased their cash reserves every quarter for more than two years, and businesses in the S&P 500 index had a total of $963.3 billion at the end of March, according to the most recent data from Standard & Poor's.

Investors have been waiting for companies to use some of that cash on acquisitions, dividend increases and stock buybacks. Many financial analysts believe that companies are more confident about the future if they're willing to buy other businesses. So a series of acquisition announcements tends to send stocks higher.

The growing cash hoard has been the result of stronger profits. Companies have kept costs low by being slow to hire. Revenue, meanwhile, is growing, particularly from overseas customers. For the 460 companies in the S&P 500 that have reported second-quarter results, total earnings are up 12 percent from a year ago.

Some companies are looking to pare back. Bank of America Corp. said it will sell its $8.6 billion Canadian credit-card business to TD Bank Group. The bank will also get out of the credit card business in Britain and Ireland. The deals follow others that Bank of America made to move out of foreign credit cards, and they should help Bank of America improve its balance sheet

Bank of America rose 5.4 percent, part of a rally for the overall industry. Financial stocks in the S&P 500 rose 2.1 percent, third-best among the 10 industries that make up the index.

No. 1 was the energy industry, which rose 2.6 percent. Energy stocks benefited from a rise of $1.64 per barrel in crude oil to $87.02.

Asian and European markets rose earlier Monday after Japan said its economy shrank at just a 1.3 percent annual rate between April and June. That's less than half the drop that economists expected following the earthquake, tsunami and nuclear crisis that struck the country in March.

Still, investors have more reason to worry about the weak U.S. economy.

Manufacturers in New York told the Federal Reserve they're more pessimistic about future growth. Manufacturing has been one of the country's strongest industries since the recession ended in 2009, but growth began to slow in March. Manufacturing nationwide barely grew in July.

Cosmetics company Estee Lauder Cos. fell 6.8 percent after it forecast earnings for the upcoming year that were below Wall Street's expectations. It also said its net income rose 72 percent last quarter on strong sales growth to China, Russia and the Middle East.

Lowe's Cos., the second-largest home improvement retailer, fell 1.4 percent after said its net income was roughly flat last quarter on a 1 percent rise in revenue.

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Stocks rise on small but positive economic signs (AP)

NEW YORK – Wall Street's wildest week since 2008 continued with another 300-point move for the Dow on Thursday. This time, stocks shot up after investors saw small signs that the economy isn't headed into another recession.

Fewer Americans joined the unemployment line last week and a technology bellwether said revenue could grow faster this quarter than analysts expected. The news pushed gold prices down from record highs and sent prices on long-term Treasurys down.

The Dow Jones industrial average rose 283 points, or 2.6 percent, to 11,003 at 12:38 p.m. in New York. It had been up as many as 309 points a little before 11 a.m.

During a calm market, a 300 point move would rank as the Dow's biggest in months. This week, it's the smallest. The Dow has been volatile all week. On Monday, it plunged 634 points only to gain 429 points Tuesday and sink 519 points Wednesday. It's the first time that the Dow has moved by more than 400 points in three straight days since November 2008, when markets were tumbling during the financial crisis.

Carlton Neel, who manages about $2 billion as a senior portfolio manager at Virtus Investment Partners said investors are so scared of being the last one out of the market in a downturn or the last one in during a rally that they are stampeding in herds, creating more volatility.

"Fear tends to be a much more powerful emotion, and the sell-offs tend to be more violent than the rallies," he said. "But people are worried about missing the bottom, so you will have a few melt-ups along the way." That's because memories of the last meltdown in 2008 are still fresh in the mind of many investors.

Thursday's gain came after the government said the number of people filing for unemployment benefits for the first time fell to 395,000 last week, down 7,000 from a week earlier. It's the first time the number has dropped below 400,000 in four months.

Analysts said it may be a sign that the job market is slowly improving after its three-month slump. Job growth slowed to an average of 72,000 in May, June and July. In the previous three months, employers added 215,000 jobs per month, on average.

"It's the first scrap of economic data we've had recently that says the idea that we're going into another recession may be overdone," Neel said.

In the last few weeks, investors have grown more worried about the economy. The government said last month that it grew at its slowest pace in the first half of 2011 since the recession ended in 2009. Unemployment is still above 9 percent.

The S&P 500 index rose 33, or 3 percent, to 1,154. The Nasdaq composite index rose 74, or 3.1 percent, to 2,456.

Technology stocks helped lead stocks higher. Cisco Systems Inc. profit for the latest quarter topped analysts' expectations. Cisco is considered a bellwether for the tech industry because it is the world's largest maker of computer networking equipment. The company also said revenue may grow more quickly in the current quarter than analysts were anticipating. Cisco rose 16.5 percent. As a group, tech stocks in the S&P 500 rose 3.6 percent.

Financial stocks also rebounded from their steep drop Wednesday, up 4.1 percent after a 7.1 percent drop a day earlier.

The leaders of France and Germany, the region's biggest economies, said they will meet next week to talk about how to solve Europe's financial difficulties. Worries that Europe's debt problems could hurt the banks that own European government bonds have weighed heavily on financial stocks and the broader market. Pain for European banks could lead to more trouble for the U.S. banking industry and economy because the global financial industry is so closely linked. That has been one reason stocks have declined in the last several weeks.

Reports also circulated that European markets were considering a ban on selling stocks short, which is a way that traders bet a stock will fall.

Rumors have been a big force in driving the market in the last week. On Friday, speculation that Standard & Poor's may downgrade the U.S. from its top AAA credit rating helped knock down stocks. It turned out to be correct.

This week, speculation has centered on European banks, French ones in particular. The head of France's central bank said Thursday that the country's banks are solid and blamed "unfounded rumors" for big drops in their stocks.

In the U.S., media conglomerate News Corp., which owns Fox News and The Wall Street Journal, rose 19.1 percent. It reported earnings late Wednesday that were better than analysts expected.

Prices for longer-term Treasurys fell, as investors felt less need to put their money in investments considered safe. The yield on the 10-year Treasury note rose to 2.21 percent from 2.11 percent late Wednesday. A bond's yield rises when its price falls.

Investors had been pouring into Treasurys earlier in the week, and they briefly knocked the 10-year yield to a record low of 2.03 percent Tuesday afternoon. Treasurys have held onto their reputation as a safe place to put money even after S&P cut the U.S. credit rating to AA+.

Gold also benefited early this week from buyers looking for something safe. It rose above $1,801 per ounce for the first time on Wednesday as stock markets tumbled around the world. But it fell to $1,771.10 Thursday.

CME Group raised the amount of money that investors must put up to buy a gold contract on its COMEX exchange by 22 percent late Wednesday, driving prices off all-time highs above $1,800 per ounce as some investors were forced out.

The Dow's climb on Thursday pulls the average further away from bear market territory: The Dow ended Wednesday at 16.3 percent below its high for the year, set on April 29. A drop of 20 percent would mean the bull market that began in March 2009 has turned into a bear, a long period of stock declines.

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