* Banks lead rise on Wall Street, United Tech earnings
* Euro rebounds from month-lows vs dlr after ZEW sentiment
* Bonds turn lower as rising stocks erode safety bid
* Oil edges higher, tracking equity gains on Wall Street
(Recasts, updates U.S. markets; changes dateline, previous
LONDON)
By Herbert Lash
NEW YORK, April 21 (Reuters) - U.S. stocks rose on Tuesday,
led by financial stocks, after the U.S. Treasury secretary said
American banks are well capitalized, while the euro rose versus
the dollar on improvemed German investor confidence in April.
Market sentiment turned in the morning, with U.S.
government debt prices paring gains to turn negative and crude
oil paring early losses to trade back above $46 a barrel as
traders awaited more clues about demand.
U.S. investors shrugged off a report from the International
Monetary Fund that said global write-downs of toxic debt held
by banks and other financial institutions in the United States,
Europe and Japan could reach $4.1 trillion. []
Crude oil, bonds and currency markets have been tracking
moves in equities as traders look for signs of a recovery from
the global slowdown sparked by the financial crisis. Banks are
key to investor sentiment as they are crucial to a recovery.
Treasury Secretary Timothy Geithner said in congressional
testimony that "the vast majority of banks have more capital
than they need to be considered well capitalized by their
regulations."
U.S. equities rose after Geithner, who appeared confident
unlike past testimony, said government plans to clear toxic
assets from bank balance sheets were working, said Marc Pado,
U.S. market strategist at Cantor Fitzgerald & Co.
"You can't argue with the fact that the banks seem to have
stabilized," Pado said. "They're booking profits that may not
be repeatable, but they're sufficient to handle the provisions
they're putting forth for future losses."
Shortly after 1 p.m., the Dow Jones industrial average
<> rose 66.42 points, or 0.85 percent, at 7,908.15. The
Standard & Poor's 500 Index <.SPX> was up 10.12 points, or 1.22
percent, at 842.51. The Nasdaq Composite Index <> was up
23.53 points, or 1.46 percent, at 1,631.74.
Two U.S. manufacturing bellwethers, Caterpillar <CAT.N> and
United Technologies <UTX.N>, provided mixed outlooks after they
reported falling global demand for big-ticket products battered
their first-quarter results.
United Technologies voiced some hope for the rest of 2009
and its shares were up more than 5.0 percent; Caterpillar also
rose almost 2.0 percent after paring losses of nearly 3
percent.
The euro rebounded from one-month lows, helped by a rise in
the ZEW survey of German economic sentiment, the first time
since July 2007 that the index entered positive territory.
The euro <EUR=> was up 0.36 percent at $1.2962.
The Canadian dollar plunged against the dollar after the
Bank of Canada cut interest rates to a historic low of 0.25
percent and announced plans for possible unconventional
monetary policy.
The recovery in U.S. stocks after Monday's sharp sell-off
also helped ease demand for the greenback as a safe-haven.
The U.S. dollar is up more than 7.0 percent versus the
European currency this year on expectations the U.S. economy
will be among the first to recover from the global recession.
The euro's gains were limited, though, amid a slide in
financial shares in Europe and uncertainty over the European
Central Bank's next monetary policy move.
The U.S. Dollar Index <.DXY>, a basket of major currencies,
fell 0.32 percent at 86.387 and against the yen, the dollar
<JPY=> rose 0.65 percent at 98.59.
European shares ended slightly higher after a choppy
session as strength in retailers on impressive quarterly
results from Britain's Tesco <TSCO.L> overshadowed shaky
financial stocks.
The FTSEurofirst 300 <> of top European shares closed
0.2 percent higher at 787.52 points.
Banks fell, pressured by the IMF report.
Barclays <BARC.L> fell 4.8 percent, Royal Bank of Scotland
<RBS.L> dropped 5.9 percent, Societe Generale <SOGN.PA> shed
4.5 percent and Commerzbank <CBKG.DE> dropped 3 percent.
Oil pared early losses to trade back above $46 a barrel.
U.S. crude for May delivery <CLc1>, which expires later on
Tuesday, dropped to a low of $43.83 a barrel, before recovering
to trade up 35 cents at $46.19.
"Trading on the U.S. crude contract for May is volatile
ahead of expiration," Addison Armstrong at Tradition Energy in
Stamford, Connecticut.
U.S. Treasury debt prices pared gains to turn slightly
negative on Tuesday as stocks extended a rise and depleted the
safe-haven bid for bonds.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
7/32 in price to yield 2.8803 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 0.936 percent.
Asian stocks slid, with Japan's Nikkei share average
<> off 2.4 percent and the MSCI index of Asia Pacific
stocks outside Japan <.MIAPJ0000PUS> down 2 percent.
(Reporting by Herbert Lash)
