Reuters: US Dollar Report: GLOBAL MARKETS-Euro, stocks rise on central bank action hopes

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GLOBAL MARKETS-Euro, stocks rise on central bank action hopes Jul 27th 2012, 16:35 Fri Jul 27, 2012 12:35pm EDT * German, French leaders voice strong support for euro zone * Oil futures, metals prices also rise * Italian, Spanish bond yields fall * ECB wants gov'ts to tap bailout funds before intervening-report By Rodrigo Campos NEW YORK, July 27 (Reuters) - Stocks and the euro rallied on Friday and bond yields dipped in Spain and Italy on growing expectations of European Central Bank action to tackle high borrowing costs. Oil futures and metal prices also advanced. The markets received additional support after French and German governments said they are "determined to do everything to protect the euro zone" and its single currency. The joint statement echoed European Central Bank President Mario Draghi's comments on Thursday and overshadowed concern after Germany's Bundesbank pushed back against Draghi's pledge. French newspaper Le Monde reported that the ECB was willing to take part in action to lower the bond yields of countries such as Spain and Italy if governments agreed to tap the bloc's bailout funds. Expectations that the Federal Reserve will act to support the U.S. economy also grew after data showed U.S. gross domestic product expanded at a 1.5 percent annual rate from April through June, roughly in line with lowered expectations. "That rate of growth will not aid the Fed's employment mandate, so they will act sooner rather than later," said John Kilduff, partner at Again Capital LLC in New York. "The prospect for easing will be supportive for crude oil, other commodities and equities." Market expectations are high for another round of asset purchases from the Fed, which in the past have sparked rallies in stocks and commodities. Markets are also beginning to price in a move from the ECB, possibly in the form of bond purchases. Both central banks hold separate meetings next week. The Dow Jones industrial average rose 98.57 points, or 0.76 percent, to 12,986.50. The S&P 500 Index added 14.29 points, or 1.05 percent, to 1,374.31. The Nasdaq Composite gained 34.47 points, or 1.19 percent, to 2,927.72. The FTSEurofirst 300 unofficially closed up 1.25 percent and an MSCI gauge of global equities added 1.3 percent. Copper prices jumped 1.3 percent while Brent and U.S. oil prices rose for a fourth day running, although they were both still negative for the week after plummeting Monday. The euro hit a three-week high versus the U.S. dollar, at $1.2377 and is up 1.7 percent versus the dollar this week, its largest such advance since late February. On Tuesday the euro was at a two-year low of $1.2040 In his statement on Thursday Draghi appeared to target the bond market as he said monitoring rising borrowing costs in bloc members as they affect monetary policy was within the ECB's mandate. Ten-year Spanish bond yields hit a low of 6.731 percent, the lowest since July 17, while the Italian benchmark bond yield dipped below 6 percent for the first time in a week. In line with a move towards riskier assets, the benchmark 10-year U.S. Treasury note was down 22/32, with the yield at 1.5105 percent. Link this Share this Digg this Email Reprints

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