* Shares in U.S. and Japan higher, Europe little changed
* Oil gains after steep fall
* Yen broadly weaker on rising risk tolerance
By Nick Olivari
NEW YORK, Dec 10 (Reuters) - Optimism that governments
worldwide will bail out ailing industries and implement
stimulus measures to fight the deepening economic crisis lifted
stocks in the U.S. and Japan on Wednesday, raised oil prices
and capped recent gains in the yen.
U.S. Senate Democratic leader Harry Reid announced on
Wednesday a bill to provide $15 billion in short-term loans to
the ailing U.S. auto industry had essentially been completed
with a Senate vote possible by week's end. A bill could be
introduced in the House of Representatives later on Wednesday.
[].
Progress on the car bailout package soothed investors in
most markets and allowed a pause in the safe haven bid for U.S.
government debt.
"People are looking at the bailout as a positive," said
Peter Kenny, managing director at Knight Equity Markets in
Jersey City, New Jersey. "But the headwinds are just enormous,
this market has an awful lot to get through," he said.
Without government help, investors fear that a possible
failure or bankruptcy in the auto sector could send shock waves
through the U.S. economy and worsen unemployment.
While the news did not help the shares of the auto makers
themselves midway through the New York session, it did help
bolster overall sentiment on stocks.
The Dow Jones industrial average <> rose 97.33 points,
or 1.1 percent, to 8,788.66. The Standard & Poor's 500 Index
<.SPX> advance 10.33 points, or 1.1 percent, to 899.00. The
Nasdaq Composite Index <> added 24.74 points, or 1.6
percent, to 1,572.08.
Still it was not all good news with earnings and profit
outlooks continuing to cast a pall. Shares of Eastman Kodak
slid more than 9.0 percent to $6.53 after the photography
company warned 2008 revenue and profit will fall short of
expectations. [].
EUROPE HIGHER
European shares <> were little changed at the close,
held back by drugmakers as miners rose, but Japan's Nikkei
average <> rose 3.2 percent to a one-month closing high.
This and gains in emerging market stocks helped lift MSCI's
main world stock index <.MIWD00000PUS> around 2.1 percent,
putting it in positive territory for the month.
If sustained, it would be the first time in seven months
that the world benchmark has had a monthly gain. The index has
lost around 45 percent this year.
"What we are seeing right now may be a gradual turnaround in
global stocks as liquidity in financial markets is seen slowly
improving, helped by the latest moves by governments," said Jun
Ji-won, a market analyst at Kiwoom.Com Securities in Seoul.
At the company level, global miner Rio Tinto <RIO.L> was a
focus in Europe after it announced plans to cut capital
spending, slash its global headcount by 14,000 and boost asset
sales.
Rio shares rose 20.4 percent in London.
OIL REBOUND
Oil prices rebounded with the market looking ahead to
producer cartel OPEC's Dec. 17 meeting, which is expected to
agree more output cuts to boost prices.
U.S. crude for January delivery <CLc1> was up around $4 at
just over $46 a barrel, moving further from the four-year low
touched on Friday.
In the U.S. energy sector, Chevron <CHV.N> rose to $78.84
and Exxon Mobil <XOM.N> climbed to $80.21.
On foreign exchange markets, the yen edged down against the
U.S. dollar and most other currencies as shares extended gains.
The dollar was down against most currencies other than the yen
on rising risk tolerance sparked by the U.S. auto bailout
proposal.
The dollar rose 0.8 percent from late U.S. trading on Monday
to 92.84 yen <JPY=> while the euro was up 1.0 percent against
the dollar at $1.3034, a tw0-week high at current prices
<EUR=>.
Prices of U.S. government debt also fell on the bailout
proposal amid reduced demand for safe-haven Treasuries.
Demand for ultra-safe three-month Treasury bills, which
intensified so much on Tuesday that its yield fell below zero,
let up enough to allow the yield to move back above zero.
Rates on four-week securities, $30 billion of which the
U.S. Treasury sold on Tuesday to investors willing to accept a
zero rate of return, also rose.
Benchmark 10-year notes <US10YT=RR> fell 15/32, their
yields rising to 2.715 percent from 2.65 percent late Tuesday.
(Additional reporting by Ellen Freilich and Chuck Mikolajczak
in New York, Jeremy Gaunt in London,
(Reporting by Nick Olivari)
