* Equities climb on better-than-expected earnings
* U.S. and European economic data generally upbeat
* European bank stress test worries ease, bank stocks up
(Updates with midday U.S. markets, adds comment)
By Daniel Bases
NEW YORK, July 22 (Reuters) - Global stocks rose on
Thursday and the euro strengthened, backed by upbeat corporate
results, better-than-expected U.S. housing data, and an
improvement in European manufacturing and services activity.
Expectations before the release of European banks' stress
test results appeared to show an easing of concerns as the
region's bank stocks ranked among the best performers.
The increase in investors' risk appetite prompted some
selling of government bonds, while crude oil gained from a
combination of improving data and a weaker U.S. dollar. Gold
prices rose modestly, briefly edging back above $1,200.
U.S. existing home sales fell less sharply than expected
in June. However the supply of unsold homes rose to the
highest amount in almost a year, the National Association of
Realtors said.
"Home sales data was great. On an absolute basis, it's
(bad), but, man, it is in the right direction and certainly
crunched consensus, and that is great news," said Burt White,
managing director and chief investment officer at LPL
Financial in Boston.
"You've got a bunch of great earnings reports, revenues
are hanging in there pretty well, and other than the Bernanke
bummer yesterday, the mood is definitely looking up," he said
White was referring to Federal Reserve Chairman Ben
Bernanke's comment before the U.S. Congress on Wednesday,
describing the economic outlook as "unusually uncertain."
A gloomy report detailing a bigger-than-expected increase
in new U.S. weekly jobless claims and a drop in a private
research group's index of leading U.S. economic indicators
were overshadowed. []
In midday trade, the Dow Jones industrial average <>
rose 201.47 points, or 1.99 percent, to 10,322.00. The
Standard & Poor's 500 Index <.SPX> gained 22.89 points, or
2.14 percent, to 1,092.48. The Nasdaq Composite Index <>
climbed 50.69 points, or 2.32 percent, to 2,238.02.
Earnings of UPS, the world's largest package delivery
company, soared 90 percent in the second quarter to $845
million. UPS shares shot up 5.95 percent to $63.58 <UPS.N>.
Caterpillar, the world's largest maker of construction and
mining equipment, reported second-quarter profit of $707
million, or $1.09 a share, exceeding analysts' expectations.
Caterpillar shares rose 1.48 percent to $67.86 <CAT.N>.
While Caterpillar raised its full-year outlook, citing
sales growth in emerging market mining and energy companies,
the bellwether company and Dow component cited "significant
economic concerns," including the risk of a double-dip
recession in Europe and the United States.
The MSCI world equity index <.MIWD00000PUS> gained 1.81
percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> rose 1.85 percent. Tokyo's Nikkei <> fell
for a fifth day, off 0.6 percent.
EUROPEAN BANK SHARES RALLY
In Europe, the pan-European FTSEurofirst 300 <>
index of top shares rose 2.11 percent to end at 1,039.35.
European banks' shares advanced, with the sector focused
on the outcome of stress tests on how 91 banks would cope with
another economic slump and losses on government debt in the
wake of the euro-zone sovereign debt crisis.
Shares of Barclays <BARC.L>, HSBC <HSBA.L>, Societe
Generale <SOGN.PA> and Deutsche Bank <DBKGn.DE> were up 2.66
percent to 5.08 percent.
Major listed lenders are expected to pass, while the tests
may show the biggest problems lie with smaller, mainly
unlisted players like Germany's Landesbanks and Spain's cajas.
[]
"There is hope that the stress test will take away a lot
of uncertainty surrounding European banks, but you have to
take into account that the ECB would not publish these results
if it would be a failure overall," said Koen de Leus, an
economist at KBC Securities.
DOLLAR WILTS ON MORE EASING HINTS
The dollar and U.S. Treasury bond yields came under
pressure on the prospect of further U.S. monetary easing.
Bernanke's said in his testimony the Fed stood ready to
ease monetary policy further if the budding U.S. economic
recovery withers.
The U.S. dollar index <.DXY> fell 1 percent against a
basket of major trading-partner currencies to 82.572.
The euro rose 1.26 percent to $1.2902 <EUR=> after a
survey showed the euro zone's private sector surged in July.
European purchasing managers' indexes showed private-
sector business activity accelerated in July, surprising
economists who had expected a slowdown, and indicating
third-quarter euro-zone growth of around 0.6 percent to 0.7
percent, analysts said.
[]
But the greenback clawed back ground against the yen after
the housing data, trading nearly flat, off just 0.02 percent
to 87.04 <JPY=>.
Two-year U.S. Treasury note yields briefly matched a
record low of 0.556 percent <US2YT=RR> hit the previous day,
before rising back to 0.581 percent. The benchmark 10-year
Treasury note fell 12/32 of a point in price, pushing the
yield up to 2.93 percent <US10YT=RR>.
In Europe, Bund futures <FGBLc1> slid 22 ticks to 128.69.
U.S. light sweet crude oil futures <CLc1> rose $2.26, or
nearly 3 percent, to $78.82 per barrel.
Spot gold prices <XAU=> rose $9.20 to $1,194.70 an ounce.
(Additional reporting by Chuck Mikolajczak, Wanfeng Zhou,
Harpreet Bhal, Natsuko Waki, Tricia Wright; Editing by Jan
Paschal)
