* Libya declares ceasefire, stocks rise
* G7 intervenes to weaken yen
* Dollar jumps more than 3 percent vs. yen
* Oil rally reversed after Libya move
(Updates with U.S. close, adds quote )
By Al Yoon
NEW YORK, March 18 (Reuters) - Global stocks rose on
Friday as traders took on riskier investments following a
Libya ceasefire that reduced tension in the region, and after
several central banks intervened to stabilize the yen.
Trading capped a week of extreme volatility marked by Wall
Street's gauge of anxiety, the VIX, which on Thursday soared
to its highest level since July. Stock market volumes surged
on down days and fell on up days.
Although Wall Street finished Friday's session higher, all
three major U.S. stock indexes ended the week in the red. The
benchmark S&P 500 lost 1.9 percent, its biggest weekly decline
since November.
World shares as measured by the MSCI <.MIWD00000PUS>
advanced 0.6 percent. That gain helped the index erase some of
its 5.6 percent drop over the past six trading days and
brought the index near even for 2011.
Oil fell from earlier highs after Libya declared a
ceasefire in the country to protect civilians and comply with
a United Nations resolution passed overnight. It had surged
after the U.N. Security Council endorsed a no-fly zone for
Libya, and authorized "all necessary measures" to protect
civilians against Gaddafi's forces. []
"That (Mideast unrest) quieting down and Japan quieting
down will lead to buying," said Stephen Massocca, managing
director at Wedbush Morgan in San Francisco.
Brent crude <LCOc1> had jumped above $117 a barrel on
worries of escalating unrest in oil-rich countries after the
U.N. action to contain Libya's Muammar Gaddafi.
Brent for May delivery dropped to around $114 after the
ceasefire was declared; the contract settled at $113.93 a
barrel, down 97 cents. U.S. crude fell 35 cents to end at
$101.07 a barrel.
The dollar climbed 2.6 percent to 80.86 yen, retreating
from a session high of around 82 yen <JPY=>, following the G7
announcement to intervene to stop the currency's sharp rise in
recent days.
The show of solidarity by the G7 major developed economies
to support Japan through its biggest crisis since World War
Two comes a day after the yen soared to a record 76.25 per
dollar in chaotic trading. It is the first coordinated
currency intervention by the G7 in a decade.
The G7 "is just helping sentiment, and stocks sensitive to
risk will push on. But optimism is going to be guarded as
there are no firm resolutions surrounding the Japanese nuclear
crisis and the Middle East, and anything can happen on the
weekend," said Giles Watts, head of equities at City Index in
London.
WALL ST BUOYED BY NIKKEI AND BANKS
On Wall Street, stocks held gains but pulled back from
session highs due to caution before a long weekend in Japan,
where markets will be closed on Monday for a holiday.
Japan's Nikkei share index <> climbed 2.7 percent,
recouping some of the week's losses as Japan reeled from the
aftermath of an earthquake, tsunami and nuclear power plant
crisis. []
The Dow Jones industrial average <> gained 83.93
points, or 0.71 percent, to end at 11,858.52. The Standard &
Poor's 500 Index <.SPX> added 5.49 points, or 0.43 percent, to
1,279.21. The Nasdaq Composite Index <> rose 7.62 points,
or 0.29 percent, to close at 2,643.67 -- well off its session
high of 2,665.56.
The Dow industrials climbed as high as 11,927.09 and swung
nearly 150 points from that peak to the session low,
reflecting the market's volatility that could be tied in part
to quadruple witching.
Friday marked the end of the two-day quadruple witching
period. Quadruple witching is the expiration and settlement of
March stock-index futures, single-stock futures, equity
options and stock-index options.
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GRAPHICS:
-- G7 intervention
http://link.reuters.com/sub68r
-- Japan disaster
http://r.reuters.com/fyh58r
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Financial stocks rose after the Federal Reserve notified
some of the largest U.S. banks that they passed a second round
of stress tests. The central bank said it would let some of
those banks use some of their massive capital cushions to buy
back shares, repay the government and boost dividends.
JPMorgan Chase & Co <JPM.N> and Wells Fargo & Co. <WFC.N>
are among those planning dividend boosts. JPMorgan's stock
gained 2.6 percent to $45.74, while Wells Fargo shares added
1.5 percent to $31.83.
"There's a lot of bad things going on in the world right
now and if (the Fed) can show the big American banks are doing
pretty well, that is a good thing to show," said Frank
Bonaventure, a partner at Ober Kaler in Baltimore and former
counsel for the Office of the Comptroller of the Currency.
Industrial shares also rose on bets they could benefit in
Japan's rebuilding effort. General Electric Co <GE.N> rose 0.2
percent to $19.25, while Caterpillar <CAT.N> advanced 1.9
percent to $105.06.
Before the start of U.S. trading, European equities pared
earlier gains after China's central bank raised lenders'
required reserve ratios. The FTSEurofirst 300 <> rose
0.2 percent to close at 1,088.82.
YEN AND BONDS DROP, GOLD GAINS
The euro <EURJPY=R> rose 3.4 percent to 114.50 yen, after
climbing to a session high of 115.56 yen earlier. Some traders
noted the scale of intervention was so far a tame effort to
stem the yen's surge.
The euro <EUR=> rose to a four-month high against the
dollar of about $1.4184 after the euro/yen intervention.
Some market observers said even massive official selling
might not restrain the yen for long, pointing to Japan's last
intervention in September 2010 when it sold a huge 2.1
trillion yen, or around $25 billion worth, but only managed to
push the dollar up to 85.77 yen from 82.85 yen.
"It would need to be concerted and aggressive ... and even
then I'm skeptical," said Richard Wiltshire, a currency trader
at ETX Capital in London.
A New York Federal Reserve spokesman said the U.S. central
bank had joined the G7 in intervening to weaken the yen.
Demand for the safety of government debt waned.
The price of the benchmark 10-year U.S. Treasury note
<US10YT=RR> dipped 3/32, nudging its yield up 0.01 percentage
point to 3.27 percent.
Gold <XAU=> rose $16.09 to $1,418.40 an ounce, but was off
a record high of around $1,444 reached last week.
(Additional reporting by Anirban Nag, Joanne Frearson and
Chris Reese, Richard Leong, Edward Krudy, Chuck Mikolajczak,
Steven C. Johnson, Emily Flitter and Emelia Sithole-Matarise;
Writing by Al Yoon; Editing by Jan Paschal)
