* Dollar rises on Fed official's QE2 comments,
* World stocks up slightly, Wall Street gains; oil also up
* Yen at lows since March 18 intervention by BOJ, cenbanks
* Euro/yen hits 10-month high, euro-dollar up too
* S&P downgrades Portugal and Greece
(Recasts, updates with rebound in oil, low in yen)
By Barani Krishnan
NEW YORK, March 29 (Reuters) - The U.S. dollar rose on
Tuesday on speculation the Federal Reserve might curtail a
program aimed at keeping interest rates low, pulling U.S.
stocks higher, while oil and other key commodities prices also
rose.
The yen fell the most against the dollar since intervention
by the Bank of Japan and other major central banks to stop
runaway gains in the Japanese currency.
U.S. Treasuries widened losses after the sale of $35
billion in five-year notes. It was the second of the Treasury's
three auctions of coupons this week, totaling $99 billion.
The dollar rose against the euro after the president of the
St. Louis Federal Reserve Bank, James Bullard, told an audience
in Prague the U.S. economy was strong enough for the Fed to
curtail its $600 billion asset purchase program by about $100
billion. For details, see [].
The euro hit a session low of $1.4060 versus the dollar on
the EBS trading platform after falling through reported bids at
$1.4080. It last traded at $1.4088 <EUR=>. Traders said
sovereign bids at $1.4050 could limit losses in the single
currency.
U.S. crude oil <CLc1> rose almost 1 percent to hover below
$105 a barrel, overcoming early weakness, on doubts about
Libya's ability to resume oil exports soon after Muammar
Gaddafi's troops halted a rebel advance. [] []
Copper tracked gains in equities, while a rebound in
agricultural markets boosted other commodities ahead of the
first-quarter close. [] []
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(Graphic: http://r.reuters.com/tep68r)
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GLOBAL, US STOCKS UP
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.2 percent after slipping about 0.3 percent earlier on
weakness in European shares, particularly banks.
Global stocks rebounded on the strength in U.S. shares,
which were powered by a rise in large-cap technology firms.
Just a day ago, Wall Street registered the lowest volume for
2011.
"The quarter is ending with a lot of uncertainties out
there," 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."
Wall Street remained cautious on Tuesday over the crises in
Japan and the Middle East and north Africa. Stocks were higher,
though volume was still far below average.
The Dow Jones industrial average <> was up 85.37
points, or 0.70 percent, at 12,283.25. The Standard & Poor's
500 Index <.SPX> was up 8.24 points, or 0.63 percent, at
1,318.43. The Nasdaq Composite Index <> was up 22.56
points, or 0.83 percent, at 2,753.24. []
But Amazon.com Inc <AMZN.O> was up 3 percent, hovering
under $175, 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.[] []
European banking shares closed up after falling earlier on
a surprise capital increase by Italian bank UBI Banca <UBI.MI>.
The FTSEurofirst 300 <> index of top European shares
ended up 0.04 percent at 1,125.94.
YEN, BOND YIELDS
The dollar and euro both reached their highest levels
against the yen since March 18, when the Bank of Japan and
others intervened to stop yen gains.
The dollar rose to 82.42 yen <JPY=EBS> while the euro hit a
10-month high against the yen at 116.08 <EURJPY=R> .
"While there are no obvious catalysts for the yen's moves,
we suspect that the combination of recent equity market
resilience and higher U.S. Treasury yields is weighing on the
Japanese currency," said Vassili Serebriakov, currency
strategist at Wells Fargo Bank in New York.
U.S. 30-year Treasury bonds briefly fell a point in price
after a tepid five-year note auction, rising stocks and hawkish
Federal Reserve statements hurt yields across the Treasury
curve.
Treasury long bonds <US30YT=RR> were last down 29/32 in
price to yield 4.55 percent, up from 4.50 percent late on
Monday. The bond yields have risen from 4.38 percent on March
16.
Portugal's 10- and 2-year yields jumped to euro lifetime
highs and Greece's 2-year yields rose 10 basis points to 15.46
percent after a downgrade by Standard & Poors.
The S&P downgrades left Portugal one notch above junk and
Greece's credit-worthiness below that of Egypt, deepening the
debt woes of two of the weakest countries in the euro zone.
[]
(Additional reporting by Atul Prakash, Jessica Mortimer and
Richard Leong; Editing by Dan Grebler)
