* World stocks rise; optimism over Greece supports
* Government debt loses safe-haven bid
* Pound weak but bounces from lows
(Updates prices, comment)
By Al Yoon
NEW YORK, March 2 (Reuters) - Global equities rose on
Tuesday, with the main U.S. share index fully erasing 2010
losses on growing expectations debt-stricken Greece will secure
financial aid, while Britain's pound floundered over political
worries and public debt.
U.S. and euro zone government bond prices slipped as
optimism that Greece would announce new austerity measures and
win European Union financial support undermined the bonds'
safe-haven allure.
World stocks as measured by MSCI <.MIWD00000PUS> rose
almost 1 percent, with all global markets, including emerging
markets, trading higher.
The European Commission said Greece must take additional
measures to reach its deficit reduction target of 4 percent of
gross domestic product in 2010. It said the Greek government
was united and determined to do what was necessary to reach
that target. For details, see [].
"The market believes that Greece is going to be resolved,"
said Paul Mendelsohn, chief investment strategist at Windham
Financial Services in Charlotte, Vermont. "You are not going to
get the worst-case scenario. This is probably going to be
kicked down the road into the future."
Tuesday's advance pushed the Dow Jones industrial average
<> into positive territory for 2010, a day after two other
major U.S. indexes topped the break-even mark for the year.
Merger activity helped set the tone after CF Industries
Holdings Inc <CF.N> upped its hostile bid for Terra Industries
Inc <TRA.N> to $47.40 per share in cash and stock. Terra shares
rose 11.3 percent to $45.88 while CF shares dropped 2 percent
to $105.31. []
While equity markets are generally higher, they are
struggling to sustain the rebound from January. Many shares are
still in the red for this year and managers have toned down
expectations for gains after last year's powerful rallies.
Wealth manager Sarasin said in a note that the rally is
likely to continue but with corrections, prompting it to take
some money off the table.
"Since the risks of setbacks are gradually increasing, we
would use strong market phases to further reduce our equity
positions," it said.
European equity markets in particular remain skittish about
the state of euro zone finances, with Greece and other member
states struggling to come to grips with ballooning debt.
"Earnings in general have been on the right side of things.
But what is still going on in the background is the Greece
issue," said Bernard McAlinden, market strategist at NCB
Stockbrokers in Dublin.
In New York, the Dow industrials rose 31.74 points, or 0.31
percent, to 10,435.53. The Standard & Poor's 500 Index <.SPX>
climbed 5.63 points, or 0.5 percent, to 1,121.34 and the Nasdaq
Composite Index <> gained 11.32 points, or 0.5 percent, to
2,284.89.
The pan-European FTSEurofirst 300 <> rose 0.76
percent and Japan's Nikkei <> gained half a percent.
POUND SLIDES
Some focus within Europe shifted to Britain, where a
general election to be called in the first half of the year was
creating uncertainty about attempts to fix the country's public
finances.
Sterling came under pressure, falling half a percent to a
session low of $1.4853 before recovering to $1.4950 <GBP=>.
On Monday, it slumped to a 10-month low of $1.4780.
Although it later trimmed some losses, it still finished the
day down 1.7 percent for its biggest one-day percentage fall in
more than four months.
Investors worry that the election may give neither the
opposition Conservatives nor the ruling Labor Party a
parliamentary majority, leading to a political stalemate.
In other currency trading, the dollar was little changed
against a basket of major trading-partner currencies, with the
U.S. Dollar Index <.DXY> down 0.02 percent at 80.642.
The euro <EUR=> rose 0.08 percent to $1.3571, bouncing from
a 9-1/2-month low hit earlier as investors awaited Greece's
austerity plans. Against the Japanese yen, the dollar <JPY=>
slipped 0.11 percent to 88.99 yen.
Speculation that the EU would resolve Greece's fiscal
situation and strength in stocks led traders to pare safe-haven
bets on government debt.
Yields on benchmark 10-year U.S. Treasury notes <US10YT=RR>
rose 0.01 percentage point to 3.62 percent.
In energy and commodities trading, U.S. light sweet crude
oil <CLc1> rose $1.51, or 1.92 percent, to $80.21 per barrel,
and spot gold prices <XAU=> rose $16.00, or 1.43 percent, to
$1132.90.
(Additional reporting by Joanne Frearson and Jeremy Gaunt in
London, and Chuck Mikolajczak in New York; Editing by Dan
Grebler)
