* World stocks rebound on Wall Street's strength
* Italian banks drag down European stocks
* Oil prices up, bonds showed modest losses
* Euro hits 10-month high versus yen
(Recasts and updates with focus on U.S. stocks' rebound)
By Barani Krishnan
NEW YORK, March 29 (Reuters) - Global stocks rebound on
Tuesday, and the U.S. dollar rose too after a Federal Reserve
official said the U.S. central bank's asset purchase plan
should be curtailed.
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.1 percent, after slipping about 0.3 percent earlier, mainly
as a result of weakness in Europe. Emerging market stocks
<.MSCIEF> gained around 0.4 percent.
U.S. stocks rose on strength in largely-capitalized
technology stocks, after falling a day earlier on the lowest
volume for 2011 due to worries about earnings.
Amazon.com Inc <AMZN.O> rose almost 3.0 percent to above
$174 after it introduced a service offering remote access to
music.
Cisco Systems <CSCO.O> rose more than 1.0 percent to trade
as high as $17.45 after it said it plans to buy newScale Inc
for an undisclosed amount to boost its cloud computing
services.[] []
The Dow Jones industrial average <> was up 58.43
points, or 0.48 percent, at 12,256.31. The Standard & Poor's
500 Index <.SPX> was up 4.80 points, or 0.37 percent, at
1,314.99. The Nasdaq Composite Index <> was up 19.33
points, or 0.71 percent, at 2,750.01. []
Despite the rebound, trading on Wall Street remained
cautious due to the continuing global crises and the approach
of the end of the first quarter.
"The quarter is ending with a lot of uncertainties out
there, resulting in messy intraday moves at the same time that
nothing is really happening," said Michael Shaoul, chairman of
the New York-based Marketfield Asset Management, which oversees
$973 million.
"There's nothing obvious about what investors need to do in
this environment, and that's why you're seeing such low
volume," he said. "No one has any reason to recommit capital."
European banking shares had earlier pushed world stocks
lower on Tuesday after a surprise capital increase by an
Italian bank.
The announcement by Italy's UBI Banca's <UBI.MI> of a 1
billion euro ($1.4 billion) capital hike dragged down Italian
banks on speculation that other lenders could be heading down
the same road. UBI shares fell more than 11 percent. Investors
also remained cautious ahead of the results of stress tests on
Irish banks, due on Thursday.
The FTSEurofirst 300 <> index of top European shares
turned steady by 12:00 p.m. EDT (1600 GMT), after falling about
0.3 percent earlier.
"We are still very cautious on the banking sector as a
whole," said Felicity Smith, fund manager at Bedlam Asset
Management. "The big problem is that they need to hold more
capital and that means in future, even if the economy grows,
the returns they generate would be lower."
In the bond market, U.S. Treasuries showed modest losses as
traders trimmed prices to entice buyers to the sale of $35
billion in five-year notes at 1.00 p.m. EDT (1700 GMT). []
FED OFFICIAL'S COMMENT BOOST USD
The U.S. dollar rose against the euro after the president
of the St. Louis Federal Reserve Bank, James Bullard, told an
audience in Prague that the U.S. economy was strong enough to
curtail the Fed's $600 billion asset purchase program by some
$100 billion. [].
The euro hit a session low of $1.4060 on the EBS trading
platform after falling through reported bids at $1.4080. It
last traded at $1.4085 <EUR=>. Traders said reported sovereign
bids at $1.4050 could limit losses in the single currency,
however.
Portugal's debt remained under pressure, with yields on its
10-year bonds near record levels above 8 percent, complicating
the country's attempts to avoid a European Union bailout.
The dollar extended gains against the euro after data
showed U.S. single family home prices fell for a seventh
straight month in January, offering fresh evidence that the
housing market recession in the United States was not over yet.
[].
Meanwhile, the dollar and euro both reached their highest
levels against the yen since since March 18, when the Bank of
Japan and other major central banks intervened to stop runaway
yen gains.
The dollar rose to high of 82.42 yen <JPY=EBS> on trading
platform EBS. The euro hit a 10-month high against the yen,
rising to above 116.03 <EURJPY=R> .
In commodity markets, uncertainty over events in Libya
drove up the price of oil, as government troops under Muammar
Gaddafi halted a rebel advance aimed at restoring oil exports
from the OPEC member.
In commodity markets, U.S. crude oil's benchmark May
contract <CLc1> was up almost half a percent at above $104.40
a barrel. It had fallen more than a dollar earlier. []
U.S. copper prices also turned positive. But gold remained
under pressure after Monday's losses as the prospect of
interest rate increases undermined its appeal as an inflation
hedge. [] []
Analysts said unrest in the Middle East was lending broad
support to oil and other commodities while Japan's nuclear
crisis posed growth worries over demand for raw marterials.
"We have two factors that are countervailing," said Harry
Tchilinguirian, analyst at BNP Paribas.
"There is a risk premium in the Middle East built in on
risk of further contagion. On the other hand we have the fact
Japan is a major component of the global supply chain, so the
potential for a price correction in the second quarter
remains."
(Additional reporting by Atul Prakash, Jessica Mortimer and
Richard Leong)
