NEW YORK (Reuters) – Global stocks rebounded and the euro steadied from its lows for the year on Monday as world leaders emphasized their support for economic growth in the euro zone and China said it is open to embark on more steps to stimulate business.
Still, most investors and analysts see the pause in selling of stocks and other risky assets as temporary, given the uncertainties ahead for Greece, which holds national elections on June 17.
On Saturday, leaders of the Group of Eight nations stressed that their “imperative is to promote growth and jobs” for the euro zone and expressed support for Greece to stay in the euro.
Despite calls from the United States for immediate moves to boost growth, no sign emerged that Germany would soften its stance on austerity as the cure for Europe’s debt problems.
“We’re in a bit of an oversold bounce in here at the moment and whether we’re going to build on all of this we’ll find out this week; we’ll still be hostage to European news and will be for the foreseeable future,” said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.
The absence of negative news from Europe revived some appetite for U.S. shares despite the ongoing sell-off of Facebook (FB.O) following its lackluster debut on Friday.
In midday trading, the Dow Jones industrial average was up 91.27 points, or 0.74 percent, at 12,460.65. The Standard & Poor’s 500 Index was up 14.56 points, or 1.12 percent, at 1,309.78. The Nasdaq Composite Index was up 54.17 points, or 1.95 percent, at 2,832.96.
U.S. stocks came off their worst weekly loss in a year as Friday’s sloppy debut by Facebook disappointed investors. The social networking company fell 11 percent to $33.98 on Monday, a tad more than $4 below its initial offering price.
While Facebook shares faded after much fanfare, established technology companies did better, led by Apple Inc, (AAPL.O) whose shares rose 4 percent to $553.48.
The FTSE Eurofirst index of top European shares was up 0.5 percent at 975.04 after losing 5.1 percent last week to reach its lowest level of the year.
The MSCI world equity index rose 0.9 percent. I t is below where it started the year, having given up all the gains made after a concerted round of easing by central banks in the first quarter.
Spain added to fears of a spreading euro zone crisis on Friday when it revised up its estimated 2011 budget deficit to 8.9 percent of GDP from a previous 8.5 percent, a figure that was already higher than the original target of 6 percent of GDP.
Spanish benchmark 10-year bond yields held at 6.28 percent, while the 10-year Italian debt yield was flat at 5.93 percent. These long-term borrowing costs are seen as unsustainable for the euro zone’s fourth- and third-largest economies, respectively.
The euro was up 0.02 percent 1.2784, well above Friday’s four-month low of $1.2642, which was not far from its lowest point for 2012.
Nagging jitters over the financial contagion from the festering debt problem in Europe offset earlier profit-taking on U.S. and German government debt.
Benchmark U.S. Treasury yields touched historic lows and Bund futures hit contract highs last week on bids from nervous investors.
U.S. 10-year Treasury notes were down 4/32 in price for a yield of 1.74 percent, while German Bund futures edged down 6 basis points to 143.58.
CHINA PROMOTES GROWTH
Signs that China, the world’s second-largest economy, was willing to support measures to boost growth offset some of the euro zone worries in global share and commodity markets.
“We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth,” Premier Wen Jiabao said in comments reported by state news agency Xinhua on Sunday.
“Remarks from the premier made during field trips are always in recognition that policymakers have noticed changes in economic fundamentals and are ready to respond,” said Yao Wei, a Hong Kong-based economist with Societe Generale.
Wen’s comments helped lift Asian shares, with Japan’s Nikkei index gaining 0.3 percent after finishing its seventh straight week of losses on Friday.
Brent crude rose toward $108 per barrel, recovering from a 2012 low, on hopes the Chinese premier’s announcement could mean strong fuel demand by the world’s second-largest oil user, although concerns about the euro zone crisis capped gains.
Brent gained for the first time in four sessions, rising $1.29 cents to $108.43 a barrel. In New York, U.S. oil futures were up 80 cents at $92.28 a barrel.
Three-month copper futures on the London Metal Exchange settled 1.29 percent higher at $7,746.75 a tonne.
Spot gold prices dipped 0.05 percent to $1,590.78 an ounce after rising the previous two sessions.
(Reporting by Ed Krudy and Richard Leong in New York; Richard Hubbard, Anirban Nag, Jessica Donati in London; Umesh Desai in Hong Kong; Editing by Dan Grebler)
