* Banks lead rise on Wall Street, United Tech earnings
* Euro rebounds from month-low vs dollar after ZEW survey
* Bonds turn lower as rising stocks erode safe-haven bid
* Oil edges higher, tracking equity gains on Wall Street
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 21 (Reuters) - A surge in financial shares
lifted Wall Street on Tuesday after the U.S. Treasury secretary
said American banks have enough capital, while the euro gained
against the dollar on a jump in German investor confidence.
Market sentiment turned in the morning, with U.S.
government debt prices paring gains to turn negative and crude
oil reversing early losses to trade back above $46 a barrel as
traders awaited more data shedding light on 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. For details please
see []
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.
Financials were the best-performing sector in the broad S&P
500 index <.SPX> after Treasury Secretary Timothy Geithner said
in congressional testimony that most U.S. banks have enough
capital to keep lending, but bad debts are slowing a recovery.
[]).
Geithner's testimony came a day after fears that government
"stress" tests would reveal inadequate capital levels at banks
had weighed on financial shares and the overall market.
"There was concern that the stress tests might indicate
that a lot of the banks needed additional capital, but his
comment was that the majority of banks are adequately
capitalized," said Bucky Hellwig, senior vice president at
Morgan Asset Management in Birmingham, Alabama.
Both the S&P Financial index <.GSPF> and the KBW bank index
<.BKX> rose a little more than 8 percent.
The Dow Jones industrial average <> closed up
127.83points, or 1.63 percent, at 7,969.56. The Standard &
Poor's 500 Index <.SPX> rose 17.70 points, or 2.13 percent, at
850.08. The Nasdaq Composite Index <> added 35.64 points,
or 2.22 percent, at 1,643.85.
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 climbed 4.8 percent; Caterpillar also rose, up
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. It was the first
time since July 2007 that the index was in positive territory.
The euro <EUR=> was up 0.17 percent at $1.2937.
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 0.15 percent at 86.529 and against the yen, the dollar
<JPY=> rose 0.80 percent at 98.73.
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. which were pressured by the IMF report.
The FTSEurofirst 300 <> of top European shares closed
0.2 percent higher at 787.52 points.
Oil pared early losses to trade back above $46 a barrel.
U.S. crude for May delivery <CLc1> rose 63 cents to settle
at $46.51 a barrel on expiration day, rebounding from a nearly
five-week low of $43.83 a barrel earlier in the day.
London Brent crude <LCOc1> fell 4 cents to $49.82.
New York gold futures ended lower after a mixed session as
a late rally in the U.S. stocks quelled concerns about the
financial system, prompting investors to lock in recent gains.
Gold for June delivery <GCM9> settled down $4.80 at $882.70
an ounce in New York.
U.S. Treasury debt prices pared gains to turn slightly
negative as stocks rose and eroded a safe-haven bid for bonds.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
14/32 in price to yield 2.91 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 0.94 percent.
(Reporting by Herbert Lash)
