* Wall Street gains on earnings, Caterpillar price target
* Bonds rise as index on U.S. home builder sentiment dips
* U.S. dollar struggles, euro close to 14-month high
* U.S. oil jumps above $79 a barrel on market optimism
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Oct 19 (Reuters) - Global stocks rallied to fresh
12-month highs on Monday as surprisingly strong corporate
results spurred a bullish mood in financial markets that also
drove U.S. oil prices above $79 a barrel.
The dollar held near 14-month lows against the euro, but
expectations that the U.S. currency will remain on a downward
slope lifted copper to its highest level in more than a month
and bolstered the price of other commodities, including gold.
U.S. gold futures ended higher as the weak dollar boosted
bullion's appeal as a hedge against the eroding value of paper
assets. For details, see: []
U.S. stocks jumped almost 1 percent, lifting all three
major U.S. stock indexes to fresh 12-month highs amid rising
investors' bullishness over third-quarter earnings.
As of midday on Monday, of the 62 companies in the S&P 500
that had reported results, 79 percent were above analysts'
expectations, according to data compiled by Thomson Reuters.
"So far three out of four earnings have been better than
expected, no real horror stories, and at this point (the
advance) looks set to continue," said Frank Lesh, a broker and
futures analyst with Future Path Trading in Chicago.
Better-than-expected results from such companies as
diversified manufacturer Eaton Corp <ETN.N> and Gannett Co Inc
<GCI.N>, the largest U.S. newspaper publisher, buoyed investors
looking for confirmation the economy is stabilizing.
[]
Caterpillar <CAT.N> led the Dow higher, gaining 6 percent,
after Bank of America Merrill Lynch raised its stock price
target to $65 from $52, and increased its 2010 and 2011
earnings-per-share forecast.
Caterpillar, which reports quarterly results on Tuesday,
rose to $57.85.
The Dow Jones industrial average <> closed up 96.28
points, or 0.96 percent, at 10,092.19. The Standard & Poor's
500 Index <.SPX> gained 10.23 points, or 0.94 percent, at
1,097.91. The Nasdaq Composite Index <> climbed 19.52
points, or 0.91 percent, to finish at 2,176.32.
European shares also hit a fresh 12-month closing high, and
Asian shares hovered near 14-month highs.
The FTSEurofirst 300 <> index of leading European
shares rose 1.7 percent to 1,026.46, its highest close since
Oct. 3, 2008.
Stronger earnings raised optimism about the economy in the
oil markets, outweighing weak fundamentals. []
U.S. crude for November delivery <CLc1> settled up $1.08 at
$79.61 a barrel, the highest settlement since Oct. 13, 2008.
London Brent crude <LCOc1> rose 78 cents to settle at $77.77.
"We have been tagging along with equities," said Gene
McGillian, analyst at Tradition Energy in Stamford,
Connecticut. "It comes down to whether or not the fundamentals
underlying the oil market itself can justify holding that
level."
Investors bet the Federal Reserve will hold U.S. interest
rates near zero well into the coming year, putting a damper on
the dollar. []
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.45 percent at 75.260.
The euro <EUR=> was up 0.24 percent at $1.4939, and against
the yen, the dollar <JPY=> was down 0.29 percent at 90.62.
"The dollar remains a victim of U.S. fiscal and monetary
policies," said Andrew Bekoff, chief investment officer for
Family Office Group in New York. "The current Federal Reserve
policy remains accommodating. This serves to keep rates low and
spending by the government high."
Long-dated U.S. Treasuries found favor with investors after
fresh weakness emerged in a home builders' sentiment index and
as talk persisted about the eventual tapering off of a monetary
easing policy. []
"The dip in home builders' sentiment added to the
collection of anecdotal evidence suggesting that the economic
recovery is not off and running," said Chris Rupkey, chief
financial economist at Bank of Tokyo/Mitsubishi UFJ in New
York.
Benchmark 10-year Treasury notes <US10YT=RR> rose 6/32 in
price to yield 3.39 percent.
The benchmark MSCI index of Asia-Pacific shares outside
Japan <.MIAPJ0000PUS> was up 0.5 percent, just off a 14-month
peak that was reached last week. Japan's Nikkei average <>
edged down 0.2 percent.
(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 Rodrigo Campos, Nick Olivari, Chris Reese in New
York; Chris Baldwin, Jon Hopkins and Emelia Sithole-Matarise in
London; Writing by Herbert Lash; Editing by Jan Paschal)
