* U.S. stocks rise on stimulus deal in Washington
* Dollar gains vs euro but safe-haven appeal slides
* Gold prices jump to highest level since July 2008
* Crude slumps after data shows large oil inventories
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Feb 11 (Reuters) - U.S. stocks rose on Wednesday
as lawmakers reached a compromise deal on a stimulus package,
even as gold shot to a six-month high and government debt
prices gained as investors expressed doubts about the U.S.
government's revamped plan to rescue ailing banks.
The dollar rose against the yen in choppy trade as the
highly anticipated plan unveiled on Tuesday by U.S. Treasury
Secretary Timothy Geithner fell short of market expectations
and drove up the appeal of safe havens.
U.S. oil prices fell 4.3 percent after the International
Energy Agency said global energy demand this year would post
its biggest decline since 1982 due to the world's downturn.
U.S. stocks rose to session highs at the close, boosted by
a compromise deal that U.S. lawmakers reached on a $789 billion
package of tax cuts and spending aimed at reviving the flagging
U.S. economy. Voting could begin as early as Thursday.
"The fact they were able to compromise was sufficient to
get the market to take a breath after yesterday," said Marc
Pado, U.S. market strategist at Cantor Fitzgerald & Co. "That I
think is what helped turn the market around."
The stock rally bucked a worldwide trend in equities, and
the market was driven higher by financial shares that had been
heavily beaten down a day earlier.
MSCI's all-country index <.MIWD00000PUS> fell 0.23 percent,
while an index of Europe's leading companies and a pan-Asia
index outside of Japan also declined.
The Dow Jones industrial average <> closed up 50.65
points, or 0.64 percent, at 7,939.53. The Standard & Poor's 500
Index <.SPX> added 6.58 points, or 0.80 percent, at 833.74. The
Nasdaq Composite Index <> climbed 5.77 points, or 0.38
percent, at 1,530.50.
Shares of JPMorgan <JPM.N> climbed 6 percent, making it a
top boost to the Dow, while Citigroup <C.N> added 10.2 percent
and Bank of American gained 9.2 percent.
The S&P financial index advanced 5.2 percent, after an 11
percent slide on Tuesday, and the KBW Banks index <.BKX>
advanced 6 percent, after Tuesday's nearly 14 percent slide.
U.S. and euro zone government debt prices rose on worries
about the effectiveness of the Treasury's bank rescue plan.
"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 during the session.
Gold for April delivery <GCJ9> rose 3.3 percent to settle
up $30.30 at $944.50 in New York.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
11/32 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.
Other signs of risk aversion abounded.
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.
In European stocks, 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 rally on Wall Street cut some of the dollar's gains as
the economic stimulus plan reduced demand for the U.S. currency
as a safe-haven currency.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.24 percent at 85.775. Against
the yen, the dollar <JPY=> rose 0.14 percent at 90.43.
The euro <EUR=> fell 0.01 percent at $1.2896.
U.S. oil's losses came after the Paris-based IEA said in
its monthly report that global oil demand would fall by 980,000
barrels per day in 2009, which would exceed its previous
forecast for a 500,000 bpd contraction.
(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)
