(Recasts with U.S. data, earnings)
By Natsuko Waki
LONDON, April 15 (Reuters) - European stocks and the dollar
rose and Wall Street was set for a firmer open on Tuesday after
strong U.S. quarterly earnings and firmer U.S. producer prices
and manufacturing data.
Oil stormed to all-time peaks due to supply concerns in
Mexico while other commodities such as rice and gold firmed,
boosting resource-related shares.
Sterling hit a fresh 11-1/2 year low on a trade-weighted
basis and record lows versus the euro after data showing steady
inflation and slowing housing markets raised expectations the
Bank of England might cut interest rates again this year.
Concerns about the health of corporates and banks hit by the
credit crisis eased after Johnson & Johnson <JNJ.N> and Northern
Trust <NTRS.O> posted higher quarterly profits. State Street
<STT.N>'s quarterly profit surged 69 percent.
U.S. data showed producer prices rose a higher-than-expected
1.1 percent in March while core prices came in line with
forecast at 0.2 percent.
A report by the New York Federal Reserve showed
manufacturing growth in New York state showed some stabilisation
in April after tumbling to a record low in March.
"(The manufacturing survey) suggests the growth outlook may
not be quite so dire," said T.J. Marga, fixed income strategist
at Royal Bank of Canada Capital Markets in New York.
The FTSEurofirst 300 index <> was up 0.7 percent while
the MSCI main world equity index <.MIWD00000PUS> was up 0.2
percent on the day, having hit a two-week low on Monday.
U.S. stock futures erased early losses to stand up 0.3
percent <SPc1>, indicating a firmer open on Wall Street.
Sterling fell to all-time lows of 80.65 pence per euro
<EURGBP=> after weak British housing and retail sales data. The
dollar rose a quarter percent against a basket of major
currencies <.DXY>.
In the money market, stress is building up in medium-term
euro funding, with London interbank offered rates for
three-month euro hitting a fresh 3-1/2 month high of 4.76125
percent <LIBOR>.
U.S. light crude rose as high as $113.66 a barrel <CLc1>.
U.S. rice futures <RRN8> rose to an all-time high, extending
this year's increase to more than 60 percent, while corn <CK8>
kept within sight of a recent record. Gold also extended gains
<XAU=> to $933.40 an ounce.
European credit spreads moved a touch tighter. The iTraxx
Crossover index <ITCRS5EA=GFI>, most-widely watched indicator
for European credit market sentiment, hit 527 basis points.
Emerging sovereign spreads <11EMJ> tightened 6 bps while
emerging stocks <.MSCIEF> were up 0.2 percent.
The June Bund future <FGBLM8> fell 37 ticks as investors
sought riskier stocks at the expense of safe-haven bonds.
SLOWDOWN AHEAD
Despite Tuesday's U.S. earnings results offering some
respite, there is growing evidence of worsening liquidity and
credit conditions hitting the real economy hard eight months
after the initial wave of the U.S. subprime mortgage fallout hit
financial markets.
The Royal Institution of Chartered Surveyors said British
surveyors reported the most widespread fall in house prices in
the 30-year history of their survey. Official data showed annual
British house price inflation eased to a 19-month low of 6.7
percent in February.
The British Retail Consortium said like-for-like retail
sales fell in March for the first time in two years, and at the
sharpest pace in nearly three years.
A closely watched survey by the ZEW research institute
showed German investor sentiment deteriorated for the first time
in three months in April.
"The view that the United States (is) only in a temporary
phase of weakening and will soon move towards potential growth
is barely tenable any more. That is playing a role. The
environment in the euro zone is also weakening," said Peter
Meister, economist at BHF Bank.
Investors are looking to further earnings data this week to
see how corporates performed in the first three months of this
year.
U.S. firms reporting their Q1 results later include Intel
<INTC.O> and Washington Mutual <WM.N>.
An expected quarterly loss from Wachovia Corp <WB.N> on
Monday raised concerns about the health of banks hit by their
investment in risky U.S. subprime mortgages.
However, earnings results from banks -- many of them pretty
weak -- have so far helped reassure investors that they are
scrubbing their books clean, putting the credit crunch behind
them.
(Editing by Gerrard Raven)
