* Euro rebounds on talk of increase euro zone rescue fund
* Oil surges on supply disruptions, cold weather
* US stocks rise, energy shares lead
* US Treasuries down ahead of bond sales
(Recasts, updates with U.S. markets' close, adds quote and
Nikkei futures)
By Manuela Badawy
NEW YORK, Jan 11 (Reuters) - The euro rose on Tuesday on
speculation that euro-zone officials could raise the effective
lending capacity of the bloc's rescue fund while a surge in
oil prices pushed U.S. energy stocks higher.
Crude oil prices climbed above $91 a barrel as a key
Alaskan pipeline remained shut and on colder weather, lifting
shares of energy producers but limiting gains of
transportation and consumer-related stocks.
The euro also got a lift from talk of increased Portuguese
bond buying by the European Central Bank and Japan's pledge to
buy about 20 percent of the bonds to be jointly issued later
this month to raise funds to support euro-zone periphery
countries.
The possibility of increasing the actual capacity of the
European Financial Stability Facility (EFSF) to a full 440
billion euros, from around 250 billion, could be part of moves
aimed at calming fears over the severity of the region's debt
crisis. []
But investors remained cautious ahead of a make-or-break
debt auction in struggling Portugal on Wednesday.
The auction will signal whether the indebted country will
be able to afford to raise funds in the debt market or be
forced to take a bailout. Spain will follow suit on Thursday.
U.S. Treasury debt prices slipped on Tuesday ahead of
re-opened 10- and 30-year bond sale this week. Gold rose for a
second day on rising demand before China's Lunar New Year in
early February, while thermal coal prices rose to a year high
due to fresh flooding in Australia, a top global exporter.
[]
Energy shares helped the Dow and the S&P 500 end a
three-day losing streak even as investors worried that rising
fuel costs will undercut economic growth.
The Dow Jones industrial average <> rose 34.43 points,
or 0.30 percent, to end at 11,671.88. The Standard & Poor's
500 Index <.SPX> added 4.73 points, or 0.37 percent, to
finish at 1,274.48. The Nasdaq Composite Index <> gained
9.03 points, or 0.33 percent, to close at 2,716.83.
The S&P Energy Index <.GSPE> rose 1.6 percent, but
transportation stocks and consumer names softened as a 2
percent rally in oil prices raises costs for other
industries.
"There's a big feeling we're going to have $100 barrel oil
pretty quickly," said Shawn Hackett, president of Hackett
Advisors in Boynton Beach, Florida.
He said that is clearly bullish for the sector, but oil
above $90 a barrel could "take disposable income away from the
economy and could hurt demand."
"All the leading indicators are pointing towards a
positive earnings season once again," said Lothar Mentel,
chief investment officer at Octopus Investments in London,
adding that markets could push higher "as long as the positive
results are accompanied by half-decent outlooks."
Both Sears Holding Corp <SHLD.O> and Tiffany & Co <TIF.N>
raised their profit outlooks, citing strong sales.
[] and []
Homebuilder Lennar Corp <LEN.N> surged 7.1 percent to
$20.24 after after posting a fourth-quarter profit sharply
higher than expected. For details, see []
The front month futures contract for the Nikkei 225 stock
index <0#NK:> trading in Chicago rose 105 points to 10,585.
The pan-European FTSEurofirst 300 index <> of top
shares rose 1.23 percent to 1,147.15, near its highest closing
level since mid-September 2008.
World stocks as measured by MSCI <.MIWD00000PUS> advanced
0.53 percent, with the emerging markets index <.MSCIEF>
gaining 0.61 percent.
AUCTIONS COMING UP
The single currency was up 0.22 percent at $1.2970 <EUR=>
by late afternoon in New York trade ahead of Portugal's sale
on Wednesday of 1.25 billion euros of bonds. This auction is
seen as a critical test as to whether the indebted country is
able to raise funds in the debt market or be forced to take a
bailout.
The premium that investors demand to hold bonds issued by
Spain, Italy and Portugal, rather than low-risk German Bunds,
reversed earlier widening, with traders citing the European
Central Bank's bond buying.
Portugal's prime minister and finance minister said on
Tuesday that Portugal has no plans to seek a bailout, and the
government was doing everything possible to avoid doing so.
[]
Italy and Spain are also due to tap the bond market on
Thursday, in auctions that will also be closely watched for
any sign of contagion. []
The dollar slipped against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.05 percent at 80.84.
U.S. government bonds fell as traders prepared for sales
of re-opened 10- and 30-year Treasury debt securities, but the
day's steepest losses were trimmed after a three-year note
auction drew a strong bid.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
14/32, with the yield at 3.343 percent. The 2-year U.S.
Treasury note <US2YT=RR> dipped 1/32, with the yield at 0.602
percent. The 30-year U.S. Treasury bond <US30YT=RR> dropped
13/32, with the yield at 4.491 percent.
The U.S. Treasury will sell $21 billion in re-opened
10-year notes on Wednesday, and $13 billion in re-opened
30-year bonds on Thursday.
U.S. light sweet crude oil <CLc1> shot up $1.86, or 2.08
percent, to settle at $91.11 per barrel, as the Trans Alaska
Pipeline remained shut after a leak was discovered on
Saturday, removing more than half a million barrels per day
from U.S. markets and on strong winter demand for North Sea
crude.
Spot gold prices <XAU=> rose $6.61, or 0.48 percent, to
$1,381.10 an ounce as last week's price decline encouraged an
improvement in consumer demand in China ahead of the Lunar New
Year in early February, pushing premiums for gold bars to
their highest in two years.
Fresh flooding in top global exporter Australia has added
a further $10 to coal prices, driving thermal coal to a year
high. []
Prices for thermal coal, used for power generation and the
second-biggest energy source after oil, have gained more than
40 percent in the past 12 months to over $140 a tonne because
supply from every key exporter is capped. [].
LME benchmark copper <CMCU3> jumped $189 or 2 percent to
close at $9,510 a tonne, within reach of last week's record
high of $9,754, as investors continued to price in stronger
2011 demand outlooks for top consumers China and the United
States.
(Reporting and writing by Manuela Badawy; Additional
reporting by Nick Olivari, Rodrigo Campos and Ellen Freilich
in New York, and Harpreet Bhal in London; Editing by Jan
Paschal)
