* Financial shares rally, help lift U.S., European indexes
* U.S. dollar rallies on U.S. "no devaluation" pledge
* Apple, IBM beat estimates, but shares fall after hours
* Tokyo's Nikkei futures point to weak stocks at open
(Recasts, adds US market close, adds comment, Nikkei futures)
By Daniel Bases
NEW YORK, Oct 18 (Reuters) - Financial shares led U.S. and
European stock markets higher on Monday after Citigroup
reported profits while the U.S. dollar rallied late after
Washington said it would not devalue the greenback.
U.S. Treasury Secretary Timothy Geithner told investors in
Silicon Valley that China's currency, the yuan, remains
significantly undervalued even after Beijing has allowed more
flexibility in its exchange rate regime.
"It is very important for people to understand that the
United States of America and no country around the world can
devalue its way to prosperity, to (be) competitive," Geithner
said. "It is not a viable, feasible strategy and we will not
engage in it." For details, see []
Citigroup Inc <C.N>, whose near-death experience in the
financial crisis required three different taxpayer rescues,
pulled out a third straight quarterly profit. The results
cheered up investors, at least temporarily, with growing
concerns over the potential exposure major banks have to
foreclosure losses.
"It is very much an earnings-driven day, it's very much
about the fact that the banks are trading well," said Nick
Kalivas, an analyst at MF Global in Chicago. "People are
comfortable with what Citigroup had said about the foreclosure
issue."
European financial shares were also given a boost on news
Royal Bank of Canada has agreed to buy UK-based fund manager
BlueBay Asset Management <BBAY.L> at a 29 percent premium above
Friday's closing price.
Heading into Tuesday's trade, Tokyo share prices were
poised to open lower after marginal losses on Monday. The
December futures contract for the Nikkei 225 stock index
<0#NK:> trading in Chicago fell 45 points to 9515.
Comments from Fed Chairman Ben Bernanke on Friday that more
stimulus was needed resonated into the new week, cementing the
view that more quantitative easing (QE) would take place.
However, assumptions for large amounts of stimulus appear to be
fraying.
"After the news came out that the Fed most likely will be
engaging in some quantitative easing next month people took
that as a sign to finish out their short dollar trades," said
Brendan McGrath, manager of business solutions at Custom House,
a Western Union company, in Victoria, British Columbia.
QE effectively requires the Fed to print more money, thus
increasing supply and keeping interest rates at low levels.
Spot gold tacked on a few pennies but held just under its
all-time high of $1,387.10 while crude oil prices advanced 2
percent.
EARNINGS
Wall Street finished on a strong note. The Dow Jones
industrial average <> rose 80.91 points, or 0.73 percent,
to 11,143.69. The Standard & Poor's 500 Index <.SPX> gained
8.52 points, or 0.72 percent, to 1,184.71. The Nasdaq Composite
Index <> climbed 11.89 points, or 0.48 percent, at
2,480.66.
Citigroup Inc <C.N> shares rose 5.5 percent, to $4.17,
after its results slightly beat Wall Street's forecasts. For
details see [].
The KBW bank index <.BKX> rose 2.98 percent after dropping
4.5 percent last week.
Shares of computer and phone maker Apple Inc <AAPL.O> fell
5.7 percent to $299.94 in after-hours trade after a bout of
profit-taking following an 8-week 32 percent rally.
The company reported results that easily beat Wall Street
forecasts but sales of its newest product, the iPad tablet,
fell short of expectations. For more, click on []
Shares in IBM also fell after the closing bell.
International Business Machines Corp <IBM.N> reported a
higher-than-expected profit and raised its outlook for the full
year, but the shares fell to $301.79 on sluggish sales of
technology services in after-hoours trading. [].
The pan-European FTSEurofirst 300 <> index of top
shares closed up 0.26 percent at 1,088.40. The MSCI All-Country
World index <.MIWD00000PUS> rose 0.2 percent.
Shares of BlueBay, a leading European bond fund manager,
rose 29.61 percent on the 963 million pounds ($1.5 billion)
offer by RBC, Canada's biggest bank by market value.
European banks Barclays <BARC.L>, HSBC <HSBA.L> and Societe
Generale <SOGN.PA> were up ranging between 1.2 percent and 2.5
percent.
CURRENCIES
The dollar rallied 0.21 percent versus a basket of major
trading-partner currencies <.DXY> on the Geithner comments.
The euro regained its footing but added just 0.01 at
$1.3977 <EUR=>, still off last week's 8-1/2 month high. The
greenback fell 0.29 percent to 81.19 yen <JPY=>, edging back
towards a 15-year low of 80.88 hit on EBS last week.
On Monday, September's reading of U.S. industrial
production fell unexpectedly. []
The benchmark 10-year U.S. Treasury <US10YT=RR> rose 15/32
of a point in price, driving the yield down to 2.51 percent.
"Treasuries are trading higher because things aren't good,
and investors continue to stay engaged in dollar-denominated
assets," said Kevin Giddis, president of fixed income capital
markets at Morgan Keegan in Memphis, Tennessee.
Crude oil <CLc1> settled up $1.83 at $83.08. Spot gold
prices <XAU=> fell $1.10 to $1,367.35 an ounce.
(Additional reporting by Ellen Freilich, Wanfeng Zhou, Rodrigo
Campos and Nick Olivari in New York, Lucia Mutikani in
Washington and Jeremy Gaunt, Anirban Nag, and Harpreet Bhal in
London; Editing by Kenneth Barry)
