* Global stocks rally as U.S. follows Asia, Europe higher
* Yen slides as stock market rebound spurs short-covering
* Oil dips below $64 a barrel as crude tracks equity moves
* Treasuries' safe-haven appeal dims as global stocks rise
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Oct 28 (Reuters) - Investors snapped up stocks
that had plunged during the worst October on record as a rally
in equities marched across the world on Tuesday and dimmed the
safe-haven appeal of government debt, the dollar and the yen.
Investors put aside any fears they may have of a deep
worldwide recession even after U.S. consumer confidence fell to
an all-time low in October, driving the Dow industrials up more
than 3 percent.
The Dow had shed almost 25 percent in October as of Monday,
and all U.S. equity markets, as measured by the Wilshire 5000
index, have lost about $4 trillion in value during the month.
A recovery in Asian equity markets overnight and a rise in
European shares sowed optimism, along with signs of a further
thaw in the credit markets. The rates banks charge each other
to borrow funds in euros, the dollar and sterling fell.
Oil retreated from session highs, at first tracking a brief
late-morning decline in U.S. stock markets and later hovering
at Wednesday's U.S. settlement of $63.22 a barrel.
The yen fell across the board while the dollar retreated
against the euro as the recovery in global stocks prompted
investors to lock in recent steep gains in the dollar and yen.
European shares snapped a five-day losing streak, riding a
huge surge in Volkswagen <VOWG.DE> shares, but banking losses
took the edge off the rally's early stellar gains.
Downtrodden sectors such as technology, financials and
energy led the U.S. stock advances, a day after a late slide
sent equity indexes to their lowest levels in 5-1/2 years.
Shares of Apple Inc <AAPL.O> , maker of the iPhone and the
iPod, were a top boost to the Nasdaq, while Exxon Mobil <XOM.N>
led the Dow's climb after rival BP Plc <BP.L> posted a record
profit.
Investors, however, remained wary about the economy's
health, causing some to sell into any apparent strength.
"Overseas markets rebounded and I think that was a catalyst
for us to open up stronger," said Alan Lancz, president of Alan
B. Lancz & Associates Inc, an investment advisory firm based in
Toledo, Ohio. "There's some nibbling in. But I wouldn't chase
any rallies. I'd use them to reduce risk."
At 1 p.m., the Dow Jones industrial average <> rose
215.13 points, or 2.63 percent, at 8,390.90. The Standard &
Poor's 500 Index <.SPX> advanced 18.41 points, or 2.17 percent,
at 867.33. The Nasdaq Composite Index <> added 21.50
points, or 1.43 percent, at 1,527.40.
The FTSEurofirst 300 index <> of leading European
shares ended 2.2 percent higher at 833.58 points.
Volkswagen soared 82 percent, adding to a 146 percent gain
on Monday, as investors needing to cover bets the stock would
slide continued to pile into the automaker after news Porsche
<PSHG_p.DE> had bought up much of VW's free float.
VW briefly became the world's biggest company by market
value. Porsche rose 9.9 percent. []
Banks stocks, however, were weak. Shares in French bank
Societe Generale <SOGN.PA> slumped for a second day in a row,
down 12.3 percent as traders cited a possible exposure to the
share price surge at Volkswagen.
Moves in currency markets were technical, analysts said, as
there has been no major catalyst to change the perspective on
risk-taking, even as ongoing unwinding of leveraged trades away
from risky assets remained entrenched.
"The FX market is still completely driven by equities,"
said Vassili Serebriakov, senior currency strategist at Wells
Fargo in New York.
"I don't think there's any major reason to expect that this
fall in the yen and dollar would be pronounced and
long-lasting. Economic fundamentals are still weak all over the
world," he said.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.55 percent at 87.675. Against
the yen, the dollar <JPY=> rose 3.65 percent at 96.18.
The euro <EUR=> was down 0.05 percent at $1.246.
U.S. Treasury and euro zone debt prices fell as equity
markets rose, dimming government bonds' safe-haven appeal.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
30/32 in price to yield 3.80 percent, and the 2-year U.S.
Treasury note <US2YT=RR> fell 2/32 in price to yield 1.56
percent.
U.S. light sweet crude oil <CLc1> fell 13 cents to $63.09 a
barrel.
Gold firmed, benefiting from a softer dollar and a recovery
in equities,
Spot gold prices <XAU=> rose $6.80 to $736.40 an ounce.
Overnight in Asia, the Nikkei index <> finished 6.4
percent higher after dropping to its lowest level since 1982 on
Monday. The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose for the first time in five days, up 1.8
percent after earlier hitting a four-year low.
(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss and John
Parry in New York and Joe Brock, Rebekah Curtis, Kirsten
Donovan and Jan Harvey in London; Writing by Herbert Lash;
Editing by Leslie Adler)
