* 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 U.S. market close, adds comment, new headline)
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.
"The companies that are doing well generally are the ones
that have significant overseas revenues, or some kind of
unique product," said Kim Caughey, senior equity research
analyst at Fort Pitt Capital Group in Pittsburgh.
Earnings of UPS, the world's largest package delivery
company, soared 90 percent in the second quarter to $845
million. UPS <UPS.N> shares shot up 5.23 percent to $63.15.
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<CAT.N> shares rose 1.69 percent to $68.
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 Dow Jones industrial average <> rose 201.77
points, or 1.99 percent, to close at 10,322.30. The Standard &
Poor's 500 Index <.SPX> gained 24.08 points, or 2.25 percent,
to end at 1,093.67. The Nasdaq Composite Index <> climbed
58.56 points, or 2.68 percent, to finish at 2,245.89.
The MSCI world equity index <.MIWD00000PUS> gained 1.85
percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> rose 1.92 percent. Tokyo's Nikkei <> fell
for a fifth day, ending down 0.6 percent at 9,220.88 -- its
lowest close since July 2.
U.S. existing home sales fell less sharply than expected
in June, but the supply of unsold homes rose to the highest
amount in almost a year, the National Association of Realtors
said.
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. []
INVESTORS SNAP UP EUROPEAN BANKS
In Europe, the pan-European FTSEurofirst 300 <>
index of top shares rose 2.11 percent to end at 1,039.35.
European financial shares rose, with the STOXX Europe 600
banking index <.SX7P> gaining 3.2 percent ahead of stress test
results for 91 European banks. The tests assess how they
would cope with another economic slump and losses on
government debt in the wake of the euro-zone sovereign debt
crisis.
Standard Chartered <STAN.L>, Barclays <BARC.L>, Societe
Generale <SOGN.PA> and Credit Agricole <CAGR.PA> jumped 4.1 to
5.6 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 FALLS ON HINTS OF MORE EASING
The dollar and U.S. Treasury bond yields came under
pressure on the prospect of further U.S. monetary easing.
Federal Reserve Chairman Ben Bernanke said in testimony on
Wednesday the Fed stood ready to ease monetary policy further
if the budding U.S. economic recovery withers, describing the
economic outlook as "unusually uncertain."
The U.S. dollar index <.DXY> fell 0.97 percent against a
basket of major trading-partner currencies to 82.585.
The euro rose 1.26 percent to $1.2889 <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 expecting a slowdown, and indicating third-quarter
euro-zone growth of around 0.6 percent to 0.7 percent,
analysts said. []
"We're seeing a struggle between perception and reality,
as data from Europe has been better than anticipated while
what we've seen from the U.S. has been quite soft," said Dean
Popplewell, chief strategist at FX brokerage OANDA in
Toronto.
The greenback slipped lower against the yen <JPY=>,
falling 0.18 percent to 86.90.
Two-year U.S. Treasury note <US2YT=RR> yields briefly
matched a record low of 0.556 percent hit the previous day,
before rising back to 0.569 percent. The benchmark 10-year
Treasury note <US10YT=RR> fell 14/32 of a point in price,
pushing the yield up to 2.93 percent.
In Europe, Bund futures <FGBLc1> slid 22 ticks to 128.69.
U.S. light sweet crude oil <CLc1> rose $2.74 a barrel to
settle at an 11-week high of $79.30 per barrel, on both
stronger-than-expected economic data, which lifted the
equities markeet, and concerns that rough weather might
threaten Gulf of Mexico production.
Spot gold prices <XAU=> rose $9.20 to $1,194.70 an ounce.
(Additional reporting by Chuck Mikolajczak, Wanfeng Zhou,
Harpreet Bhal, Natsuko Waki and Tricia Wright; Editing by Jan
Paschal)
