* Stocks supported by telecom sector, overseas fears weigh
* Euro gains on expectations ECB will raise interest rates
* Brent oil flat as rebels advance on oil towns in Libya
(Updates with European markets close)
By Walter Brandimarte and Herbert Lash
NEW YORK, March 28 (Reuters) - The euro rose on Monday on
expectations of higher euro-zone interest rates while world
stocks eked out gains as concerns about Middle East and Japan
cast a cloud despite positive economic data.
Expectations that the European Central Bank will raise
interest rates as early as next month drove the euro above
$1.41, even as the defeat of Germany's ruling party in a key
state election raised concerns about the outlook for support of
measures to help debt-stricken members of the euro zone.
The president of the ECB, Jean-Claude Trichet, said on
Monday that inflation rates are durably above the central
bank's price stability target.
Data showing that U.S. consumer spending rose for an eighth
straight month rise supported equities.
U.S. consumer spending rose slightly more than forecast as
households tapped their savings to cover higher food and energy
prices, while inflation accelerated at its fastest pace since
June 2009. []
Lingering worries about unrest the Middle East and Japan's
nuclear disaster kept a lid on gains.
"It puts a cap on things for right now, at least until we
start to see some earnings come out early in April. That might
finally give us a little more upside, assuming that we have
good earnings," said Janna Sampson, co-chief investment officer
at OakBrook Investments LLC in Lisle, Illinois.
"At some point people have got to price in Japan's problems
and the problems in the Middle East that we know about."
The operator of Japan's crippled nuclear plant on Monday
said that highly radioactive water has leaked from a reactor.
[].
An upgrade of the U.S. telecommunication sector by
brokerage Robert W. Baird also supported Wall Street stocks.
For details, see [].
The Dow Jones industrial average <> rose 21.34 points,
or 0.17 percent, to 12,241.93, while the Standard & Poor's 500
Index <.SPX> gained 2.02 points, or 0.15 percent, to 1,315.82.
The Nasdaq Composite Index <> edged up 2.10 points, or
0.08 percent, at 2,745.16.
Shares of AT&T Inc <T.N> gained 1.9 percent, while Verizon
Communications Inc <VZ.N> rose 1.3 percent after Robert W.
Baird upgraded them, saying AT&T's deal to buy T-Mobile would
help stabilize the hyper-competitive industry.
In Europe, the FTSEurofirst 300 <> index of top
shares closed 0.07 percent higher, also supported by technology
stocks. Trading was slow, with volume reaching only 60 percent
of the 90-day average.
The MSCI All-Country World Index <.MIWD00000PUS> was
virtually unchanged at 340.24 points.
Brent crude oil <LCOc1> was nearly flat at $115.46 a barrel
as rebels regained control of key oil towns in Libya.
[]
U.S. Treasuries erased early losses and gained slightly as
investors anticipated good demand in an auction of two-year
notes later on the day.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32 in price, with the yield at 3.435 percent.
The dollar was down against a basket of trading-partner
currencies, with the U.S. Dollar Index <.DXY> off 0.12 percent
at 76.097. The euro <EUR=> was up 0.11 percent at $1.4096.
The loss by German Chancellor Angela Merkel's party in
Baden-Wuertemberg, which the conservatives had held for nearly
six decades, led markets to bet that Merkel will have less
leeway to shore up financially stricken members of the single
currency bloc.
But expectations of a euro-zone interest rate rise continue
to offset worries about heavily indebted Portugal and
Spain.[][]
(Reporting by Ryan Vlastelica, Julie Haviv and Ellen Freilich
in New York; Kirsten Donovan and Claire Milhench in London;
Editing by Leslie Adler)
