Reuters: US Dollar Report: GLOBAL MARKETS-Stimulus hopes spur stock, commodities rally

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GLOBAL MARKETS-Stimulus hopes spur stock, commodities rally Jun 6th 2012, 15:21 Wed Jun 6, 2012 11:21am EDT * Hopes of more stimulus measures boost sentiment * ECB holds rates steady, dashes hope for long-term cheap loans * Brent crude rallies above $100 a barrel, gold up 1 pct By Wanfeng Zhou NEW YORK, June 6 (Reuters) - U.S. and Europe shares rallied more than 1 percent and the euro gained o n W ednesday as European officials urgently explored ways to rescue Spain's debt-laden banks and expectations grew major central banks would act to bolster a slowing global economy. Brent crude jumped above $100 a barrel, while gold hit a one-month high, leading a broad rally in the commodities sector. Silver soared 4 percent and copper gained 2 percent. But comments from European Central Bank President Mario Draghi dented some of the optimism after he dashed hopes for more long-term, cheap loans, saying it was not up to the ECB to make up for other institutions' lack of action. The ECB resisted pressure to provide more support for the euro zone's ailing economy at its regular monthly policy meeting by holding its main interest rate steady at 1 percent. But investors held out hopes after Atlanta Fed President Dennis Lockhart said the Federal Reserve may need to consider additional monetary easing if a wobbly U.S. economy falters or Europe's troubles generate a broader financial shock. Fed Chairman Ben Bernanke testifies before the U.S. congressional Joint Economic Committee o n T hursday and could provide hints on the possibility of further monetary easing. The Group of 20 economies is scheduled to meet later this month. "Markets again look to central bankers like dogs to pieces of meat. Will the dog get the meat and will it taste as good?" said Peter Boockvar, equity strategist at Miller Tabak in New York. "Draghi didn't bring the meat the market dogs were hoping for as he seems to be standing pat for now, likely waiting for more stress to develop before announcing something new of substance." U.S. stocks rallied. The Dow Jones industrial average was up 192.46 points, or 1.59 percent, at 12,320.41. The Standard & Poor's 500 Index was up 21.09 points, or 1.64 percent, at 1,306.59. The Nasdaq Composite Index was up 53.50 points, or 1.93 percent, at 2,831.61. The MSCI World Equity Index jumped 1.8 percent for its biggest daily gain since early January. The pan-European FTSEurofirst 300 index rose 2.1 percent. Recent disappointing economic data from the United States and China, as well as signs of a euro area slowdown, have been feeding pressure on the world's central banks to make some response. The debt crisis in Europe showed signs of escalating after Spain, the euro zone's fourth-biggest economy, said o n T uesday it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks. "The market's expectation regarding further policy action globally is picking up," said Ian Stannard, an executive director at Morgan Stanley. "We could well see easing taking place throughout many of the G10 countries," he said. "We believe that quantitative easing from the Fed is also very much back on the table." COMMODITIES RALLY The euro gained 0.3 percent to $1.2497, well off the near two-year low of $1.2286 set o n F riday. It erased gains after the ECB's Draghi's comments but the move was short-lived. "It appears no more Band-aids are forthcoming from the (European) central bank, which has disappointed some euro bulls," said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida. The dollar rose 0.3 percent to 79.03 yen. Brent crude surged to an intra-day high of $101.28 a barrel before easing to $101.01, up $2.17. U.S. crude climbed $1.65 to $85.94. Gold rose more than 1 percent to $1,637 an ounce. Demand for safe-haven government debt fell. The benchmark 10-year U.S. Treasury note was down 17/32, the yield at 1.6303 percent. Prices of German Bund futures also fell. Despite the rally in riskier assets, Germany was able to sell 3.98 billion euros of five-year government bonds at a record low yield of 0.41 percent as investors remained nervous about Spain's banks and the possibility of Greece leaving the euro. Link this Share this Digg this Email Reprints

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