* Stocks rise in anticipation of Fed's policy meeting
* Dollar firmer before Fed meeting, tone stays defensive
* Oil rises above $81 as earlier weak dollar supports
* Bonds ease ahead of planned $74 bln auction this week
(Updates with close of European markets)
By Herbert Lash
NEW YORK, Aug 9 (Reuters) - Global stocks rose and the
dollar edged higher on Monday on growing expectations the U.S.
Federal Reserve will signal this week it is prepared to renew
its stimulus efforts to prop up an anemic U.S. economy.
Weaker-than-expected U.S. jobs data in July, released last
Friday, fanned speculation the Fed may soon buy U.S. debt to
support an economy that is showing signs of falling back into
recession and to fight potential deflation.
The dollar edged higher against major currencies as
investors were reluctant to place big bets ahead of the Fed's
policy-setting meeting on Tuesday. For details see:
[]
Volume was limited as traders and investors refrained from
chasing prices aggressively, with many already pricing in some
form of modest easing.
"The weak non-farm payrolls data before a Fed meeting is
giving further confidence to the bond market's belief that the
Fed will play to its dual mandate of both caretaker of the job
market and advocate for price stability," said George
Goncalves, head of U.S. rates strategy at Nomura Securities in
New York.
U.S. stocks gained, but the Dow was weighed by shares of
Hewlett-Packard Co <HPQ.N>, off 7.5 percent. The company said
on Friday its chief executive quit after an investigation
found he falsified expense reports to conceal a "close
personal relationship" with a female contractor.
"Today's trade is all about anticipation of tomorrow. The
main question is, 'Will the Fed throw another quantitative
easing bombshell?' And according to that, people are either
buying or waiting on the sidelines," said John Canally, an
economist at LPL Financial in Boston.
MSCI's all-country world index <.MIWD00000PUS> rose 0.4
percent, while its emerging markets index <.MSCIEF> rose 0.6
percent.
At 12:56 p.m., the Dow Jones industrial average <> was
up 32.21 points, or 0.30 percent, at 10,685.77. The Standard &
Poor's 500 Index <.SPX> was up 3.82 points, or 0.34 percent,
at 1,125.46. The Nasdaq Composite Index <> was up 10.33
points, or 0.45 percent, at 2,298.80
Against a basket of major currencies measured by the U.S.
Dollar Index <.DXY>, the dollar rose 0.35 percent to 80.685.
Stocks in Europe and Asia rose as investors grabbed
riskier assets on expectations the Fed may inject extra
stimulus to maintain a recovery, helping lift sentiment.
[]
European stocks gained after data showed German exports
should approach record levels next year after beating
forecasts in June, another sign that foreign demand is driving
a stronger-than-expected recovery in Europe's largest
economy.
Exports rose 3.8 percent, the Federal Statistics Office
said, and analysts said the figure underpinned expectations
that gross domestic product data due this week would show
growth accelerated in the second quarter. []
The FTSEurofirst 300 <> index of top European shares
climbed 1.4 percent to close at 1,071.26 points.
The rally in German government bonds paused, with
investors reluctant to push higher ahead of the outcome of akeenly awaited U.S. central bank policy meeting.
[]
U.S. Treasuries were having a hard time attracting any
safe-haven buying on Monday, however, with benchmark yields
hovering near 15-month lows.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
unchanged in price to yield 2.82 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 2/32 in price to yield 0.55
percent, while the 30-year U.S. Treasury bond <US30YT=RR> was
down 7/32 in price to yield 4.01 percent.
Oil climbed above $81 a barrel, extending last week's 2
percent rise on earlier weakness in the dollar and tensions
between the West and Iran. []
Iran showed off four new domestically made small
submarines on Sunday that it said would bolster its defense
capability as it vows to confront any military threat from
countries opposed to its nuclear program. []
U.S. light sweet crude oil <CLc1> rose 28 cents to $80.98
a barrel.
Gold prices slipped a bit as the dollar recovered lost
ground against the euro, but uncertainty ahead of a U.S.
Federal Reserve policy meeting later this week supported the
precious metal above $1,200 an ounce. []
Spot gold prices <XAU=> fell $4.25 to $1,200.00 an ounce.
The MSCI index of Asia Pacific ex-Japan equities rose 0.8
percent <.MIAPJ0000PUS> to its highest since May 4. Japan's
Nikkei share average <> fell 0.7 percent, however, due to
the negative impact of a stronger yen on exporters.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Reporting by Angela Moon, Wanfeng Zhou and Chris Reese in
New York; David Sheppard and Atul Prakash in London; writing
by Herbert Lash; Editing by Jan Paschal)
