* U.S. stocks rise on bargain-hunting in financials
* Dollar rises vs euro on worries about stimulus bill
* Gold prices jump to highest level since July 2008
* Crude slumps after data shows large oil inventories
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, Feb 11 (Reuters) - Bargain hunters pushed U.S.
stock prices up on Wednesday, while gold shot to a six-month
high and the dollar gained versus the yen as investors gave a
cold shoulder to the U.S. government's revamped bank rescue
plan.
U.S. and euro zone government debt prices rose as worries
about the effectiveness of the plan unveiled on Tuesday by U.S.
Treasury Secretary Timothy Geithner bolstered their safe-haven
appeal.
The interbank cost of borrowing dollars over three months
inched up as the outlook for the health of financial markets
remained murky in the eyes of investors after Geithner failed
to supply sufficient detail to calm widespread skittishness.
Gold jumped 3 percent to its highest level since last July
and European stocks lost ground, ending at their lowest level
in a week.
"There was a lot of disappointment behind the package,
either because the measures weren't concrete enough or because
they thought they hadn't tackled the root cause of the
problem," said BNP Paribas analyst Michael Widmer.
"A lot of investors reassessed the risk in the market, and
as risk aversion increased, it helped prices," said Widmer,
referring to the steady rise in gold prices during the
session.
Spot gold prices <XAU=> rose $27.45 to $943.70 an ounce.
Investors bought U.S. financial shares that had been beaten
down on Tuesday by double-digit stock losses as worries about
efforts to shore up the battered U.S. banking system failed
convince.
Shares of JPMorgan <JPM.N> climbed 6.3 percent, making the
stock the top boost to the Dow, while Citigroup <C.N> added 7.2
percent. The S&P financial index was up 4.7 percent, after an
11 percent slide on Tuesday, and the KBW Banks index <.BKX>
advanced 5.4 percent, after Tuesday's nearly 14 percent slide.
The financial sector also got a boost from Marsh & McLennan
Cos Inc <MMC.N> after the No. 2 global insurance broker posted
a better-than-expected fourth-quarter profit and forecast
higher profits in 2009. The stock jumped 14.3 percent.
Before 1 p.m., the Dow Jones industrial average <> rose
65.95 points, or 0.84 percent, at 7,954.83. The Standard &
Poor's 500 Index <.SPX> gained 7.68 points, or 0.93 percent, at
834.84. The Nasdaq Composite Index <> was up 9.88 points,
or 0.65 percent, at 1,534.61.
The FTSEurofirst 300 <> index of top European shares
closed 0.3 percent lower at 803.37 points, the lowest close
since Feb 3.
The drop was limited by a rally among pharmaceutical shares
after Sanofi-Aventis <SASY.PA> posted better-than-expected
results and investors cheered its new growth strategy. Sanofi
gained 8 percent.
"As long as we don't get signals that the bottom has been
reached for consumer spending and on investment spending,
stocks will remain very volatile and stuck in a bear market,"
said Alexandre Iatrides, a fund manager at KBL Richelieu.
The dollar rose against the yen in choppy trading as
investors locked in gains made by the Japanese currency on
Tuesday. But the dollar's gains were limited by anxiety about
the final size and scope of the U.S. recovery efforts.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.47 percent at 85.965.
The euro <EUR=> was down 0.22 percent at $1.2868. Against
the yen, the dollar <JPY=> was up 0.37 percent at 90.63.
"The new administration has promised to do so many things
but there hasn't been enough concrete evidence that they're
doing enough to help this economy," said Steven Butler,
director of foreign exchange trading at Scotia Capital in
Toronto. "I just think the market is asking for the world and
they're not getting it."
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
10/32 in price to yield 2.77 percent. The 30-year U.S. Treasury
bond <US30YT=RR> rose 18/32 in price to yield 3.45 percent.
Oil pared earlier gains to fall toward $37 a barrel after
government data showed that U.S. crude oil stockpiles rose more
than expected last week on low demand from refineries.
"We have a glut of oil here in the United States and any
OPEC cuts that we are seeing are not enough to keep up with the
decline in demand," Mike Zarembski, senior commodities analyst
at optionsXpress in Chicago.
U.S. light sweet crude oil <CLc1> fell 10 cents, or 0.27
percent, to $37.45 per barrel.
The MSCI index of stocks in Asia Pacific outside Japan fell
1.9 percent <.MIAPJ0000PUS>, down for a second day. Japan's
markets were closed for a public holiday.
(Reporting by Gertrude Chavez-Dreyfuss, Rodrigo Campos and
Chris Reese in New York; Ian Chua, Jan Harvey and Farah Master
in London; Blaise Robinson in Paris; writing by Herbert Lash;
Editing by Leslie Adler)
