NEW YORK (Reuters) - U.S. and European shares edged higher on Wednesday after two days of declines, helped by U.S. housing data, while the yen rose after a brief decline on the Bank of Japan's decision to ease monetary policy further.
Oil prices fell 3 percent as the market digested comments from Saudi Arabia that it would take action to keep prices in check. Prices also weakened on U.S. data that showed crude stocks climbed far more than expected.
Recent accommodative policies from the Federal Reserve, European Central Bank and now Japan's central bank are seen as limiting downside, but concerns persist about Europe's debt crisis and slowing growth.
Those concerns limited Wednesday's equities gains and pushed the euro back towards $1.30 against a mildly stronger dollar.
"The feel-good factor from the Bank of Japan's move has worn off quickly and it's back to European matters," said Investec strategist Phillip Shaw.
Japanese stocks rallied to four-month high after the BOJ said it would increase its asset buying and loan program, currently its main monetary easing tool, by 10 trillion yen to 80 trillion.
European shares rose 0.2 percent. The MSCI index of global stocks also was up 0.2 percent.
U.S. existing home sales rose by their fastest pace in two years, the latest indication that a recovery in the housing market was gaining traction. An index of housing shares rose 2 percent.
The Dow Jones industrial average was up 16.29 points, or 0.12 percent, at 13,580.93. The Standard & Poor's 500 Index was up 0.70 point, or 0.05 percent, at 1,460.02. The Nasdaq Composite Index was down 4.86 points, or 0.15 percent, at 3,172.94.
Euro debt crisis graphics r.reuters.com/hyb65p
Italy, Spain market overview link.reuters.com/xyq57s
Global interest rates link.reuters.com/xyb96s
Central bank balance sheets link.reuters.com/jyh34s
The Bank of Japan action helped to offset concerns about tensions between Japan and China over a disputed group of islands in the East China Sea.
The dollar jumped to 79.21 yen, its highest since August 22, after the BOJ's decision. It last traded at 78.36 yen, down 0.6 percent on the day.
In the bond market, the benchmark 10-year U.S. Treasury note was up 11/32, with the yield at 1.7718 percent.
Oil prices sank to $108.98. Brent is down about 7 percent so far this week, though it remains up more than 11 percent over the past three months.
Gold, which has a twin appeal as a safe-haven asset and inflation hedge, shrugged off the concerns to sit at a 6-1/2 month high of $1,772.49 an ounce.
China's economy remains a major worry for global markets. The government said on Wednesday the export outlook was grim and demand may be weaker in the next few months than it has been so far this year.
"With the European Central Bank, the U.S Federal Reserve and now the Bank of Japan - the world's major central banks - moving to ease, there will now be expectations for the PBOC (People's Bank of China) to follow suit," said Jackson Wong, Tanrich Securities' vice-president for equity sales.
(Additional reporting by Anirban Nag in London; Editing by Kenneth Barry)
Published Date: Sep 19, 2012 22:15 PM | Updated Date: Sep 19, 2012 22:15 PM