(Recasts with U.S. markets, adds byline; dateline previous
LONDON)
By Herbert Lash
NEW YORK, March 12 (Reuters) - Global stocks rose for a
second day on Wednesday on central bank efforts to ease tight
credit markets but the dollar fell broadly to a new low against
the euro on a trans-Atlantic split over interest rates.
But debt prices rose amid investor doubts whether an effort
by the Federal Reserve, the European Central Bank and other
central banks does enough to alleviate concerns about the
health of a global financial system that has stalled and
threatens bring on a U.S. recession.
Oil steadied near a record high and gold gained nearly 1
percent as the struggling dollar and firm oil prices prompted
investors and speculators to build fresh trading positions.
Strong euro zone data on industrial output renewed the
focus on the divergent paths of European and U.S. interest
rates, strengthening the case for the ECB to resist pressure
for an early interest rate cut.
The greenback and global stocks had rallied sharply on
Tuesday after the Federal Reserve said it would lend primary
dealers $200 billion in Treasury securities and accept a wider
array of mortgage debt as collateral to help ease tight credit
markets.
Investors, still worried about the outlook, took profits
amid nagging doubts about a U.S. economy many believe already
is in recession. The key equity averages retreated from initial
highs.
"I think the air is being let out of the balloon of
yesterday's run-up. I would not be completely convinced that
this test is finished yet," said Bruce Zaro, chief technical
strategist at Delta Global Advisors in Boston.
"We're still seeing people selling into any rally."
The Dow Jones industrial average <> was up 74.74
points, or 0.61 percent, at 12,231.55. The Standard & Poor's
500 Index <.SPX> was up 3.63 points, or 0.29 percent, at
1,324.28. The Nasdaq Composite Index <> was up 13.94
points, or 0.62 percent, at 2,269.70.
The financial sector led gains in U.S. and European equity
markets, while industrial shares in New York climbed as
economic bellwether Caterpillar <CAT.N> raised its revenue forecast for 2010.
Caterpillar, the world's largest maker of construction and
mining equipment, cited continued spending on worldwide
infrastructure. Shares rose 4.66 percent to $76.
European shares rose in a broad rally, with more than three
stocks advancing for every decliner, while British insurer
Standard Life <SL.L> soared on strong results.
Swiss banks UBS <UBSN.VX> and Credit Suisse <CSGN.VX>,
which have been hit by the credit crisis, both rose by more
than 6 percent after the central bank moves.
The FTSEurofirst 300 index <> of top European shares
unofficially closed up 1.1 percent at 1,283.09 points, after
earlier rising more than 2 percent to a session high of
1,296.05 points.
Despite the breadth and strength of the day's gain,
investors questioned whether it hailed a turn in the bear
market.
"(The upturn has been) another relief rally in response to
some more action by the Federal Reserve yesterday," said Darren
Winder, head of macro and strategy research at Cazenove,
described the mood.
"What we are less clear of is whether we can sustain this
rally because we have seen many of these relief rallies before.
I sense that investors are still very skeptical about the
ability of the Federal Reserve to offer sustained relief to a
banking system which is still creaking," he said.
Standard Life <SL.L> jumped 11.5 percent, the biggest
percentage gainer in the index of leading European shares,
after beating forecasts with a 43 percent rise in 2007 profit.
The rally also boosted miners, which have struggled over
the prospect of slower global growth. Rio Tinto <RIO.L> rose
3.8 percent, BHP Billiton <BLT.L> gained 4.4 percent and copper
processor Kazakhmys <KAZ.L> surged as much as 23 percent after
Eurasian Natural Resources <ENRC.L> said it may buy its rival.
Asian shares rebounded from a recent slump on the move by
major central banks.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 1.8 percent as of 0640 GMT. The benchmark
had hit a seven-week low on Tuesday, and is still down some 13
percent this year.
Japan's Nikkei average <> rose 1.6 percent, helped by
revised data showing the economy grew a surprisingly strong 0.9
percent in the last quarter of 2007.
The dollar's gains fizzled in European trade as it plunged
1 percent versus the yen, but still off eight-year lows.
The euro rose above $1.55 <EUR=> for the first time in its
nine-year history as investors wondered whether the Fed's plan
would do enough to revive credit markets and boost a struggling
U.S. economy.
Euro zone industrial output rose much more than expected in
January, the European Union's statistical office, showing
growth in the currency area despite global financial woes and
improved prospects for first-quarter economic expansion.
ECB President Jean-Claude Trichet said for the second time
this week that he was concerned about excessive exchange rate
moves, remarks that did little to temper the day's euro gains.
The euro is up 6.2 percent against the dollar so far this
year and 18 percent over the past 12 months.
Oil was steady near a record high. Investors have poured
money into commodities to hedge against inflation and the
dollar. Oil fell earlier as U.S. data showed rising crude and
gasoline stocks.
U.S. crude <CLc1> was up 1 cent at $108.76 a barrel by 1551
GMT, off the record high of $109.72. London Brent <LCOc1>
gained 9 cents to $105.34, down from an all-time high of
$105.82.
In a sign of lingering investor skittishness, euro zone
government bond futures reversed losses on market speculation
of more bad news in the financial sector.
Bunds and Euribor futures had fallen to session lows
earlier after euro zone industrial output data came in much
stronger than expected, damping the views for interest rate
cuts by the European Central Bank.
The June Bund future <FGBLM8> was last 23 ticks up on the
day at 117.70, not far from a session peak of 117.73 hit
earlier.
(Writing by Herbert Lash. Editing by Richard Satran)
