* Stocks in Europe and Japan falter, U.S. gains
* Dollar rises against euro on risk aversion
* EU proposes fiscal stimulus after Fed's $800 bln plan
(Recasts, adds quotes, updates prices, changes byline,
dateline previously LONDON)
NEW YORK, Nov 26 (Reuters) - U.S. stocks rose on Wednesday,
as bargain hunting lifted technology shares and energy shares
rose with higher crude oil prices, while European markets fell
on fears about a deep global recession.
A new string of weak U.S. weak economic data drove up
safe-haven buying in U.S. government bonds and lifted the
dollar against the euro.
U.S. durable goods orders plummeted in October and business
activity in the Midwest withered to the lowest level since the
severe 1982 recession. See []. In addition, sales
of newly built U.S. homes dropped sharply in October and were
running on levels last seen more than 17 years ago. See
[]
"The weak economic data serves as a harsh reminder of the
problems plaguing the U.S. economy," said Kathy Lien, director
of currency research at GFT Forex in New York.
"Overall, the U.S. numbers this morning all have a negative
tone to them and that should keep risk aversion higher," said
Shaun Osborne, chief currency strategist at TD Securities in
Toronto.
The European Commission on Wednesday proposed a 200 billion
euro stimulus package aimed at giving the floundering economy a
boost, following the U.S. Federal Reserve's $800 billion effort
to bolster credit and mortgage markets unveiled on on Tuesday.
China also cut interest rates by 108 basis points, a move
aimed at ensuring liquidity in the banking system and
supporting economic growth.
But positive reaction to the financial resuscitation
efforts and stocks at multi-year lows battled with concern
about the bottom-line impact on government balance sheets.
In U.S. equities markets, the Nasdaq rose more than 2
percent, outpacing gains in the other major indexes, as bargain
hunters bought shares of big-cap technology companies after
Tuesday's sell-off.
"People are pricing in a lot worse information and at these
stock market levels ... there might be some buying coming into
the market," said Giri Cherukuri, head trader at OakBrook
Investments LLC in Lisle, Illinois of the U.S. stock market.
Chevron <CVX.N> was among the biggest advancers in the Dow,
rising more than 1 percent as the price of oil popped above $53
a barrel even after data showed an increase in crude oil
inventories.
At about 1 p.m., the Dow Jones industrial average <>
was up 105.93 points, or 1.25 percent, at 8,585.40. The
Standard & Poor's 500 Index <.SPX> was up 14.14 points, or 1.65
percent, at 871.53. The Nasdaq Composite Index <> was up
45.43 points, or 3.10 percent, at 1,510.16.
Citigroup <C.N> jumped 10.5 percent to $6.72 on the NYSE
after news late on Tuesday that a Mexican brokerage controlled
by billionaire Carlos Slim recently bought $150 million worth
of shares in the struggling U.S. bank.
Cisco Systems <CSCO.O>, the networking equipment maker,
rose 3.1 percent to $15.91 on Nasdaq, a day after the stock led
a tech sell-off on worries about faltering demand.
European stocks closed slightly lower, snapping a two-day
winning streak as concerns about the likelihood of a deep
global recession outweighed the prospects for massive stimulus
plans.
The FTSEurofirst 300 <> index of top European shares
closed down 0.33 percent at 830.58 points.
"We have had a good two or three days .... so the markets
have to rest here," said Giuseppe-Guido Amato, investment
analyst at Lang & Schwarz.
"We had lots of economic data, all weaker than expected.
But if you see the data, you can also imagine the stock markets
should be 1 or 2 percent lower than now," he said.
Britain's economy shrank at its fastest rate since 1990 in
the third quarter as household spending fell by its biggest
amount in more than a decade, data showed.
Utility stocks were the worst performing sector, with GDF
Suez <GSZ.PA>, E.ON <EONGn.DE> and Gas Natural <GAS.MC> down
between 2.5 and 5.5 percent.
World stocks as measured by the MSCI index were 0.1 higher
<.MIWD00000PUS> mostly helped by gains in U.S. technology
stocks.
Toyota Motor Corp <7203.T> had its top-notch credit rating
cut for the first time in a decade. []
Tokyo's Nikkei 225 index earlier fell 1.3 percent <>.
Meanwhile, gains in the United States and a sharp 2.4
percent pickup in crude oil prices <CLc1>, did little to boost
investor sentiment, with most investors still debating what it
would take to get interbank markets working properly again.
"You can't force banks to lend if they don't want to.
Earnings worries are still there," said Bernard McAlinden,
investment strategist at NCB Stockbrokers in Dublin.
YEN STILL FAVOURED
Bond investors paid record premiums to insure against a
U.S. default on its Treasury debt. While still small compared
with premiums for smaller economies' government bonds, the
widening in U.S. credit default swap spreads showed nagging
worries about the unprecedented scale of the bailouts. []
Investors still bought U.S. bonds, however, after the weak
economic data.
"The economy may be in a deeper recession than anticipated
and that raises the specter of even larger credit-related
losses for financial institutions, which should maintain the
preference for safety, quality and liquidity that has buoyed
U.S. Treasury securities," said William Sullivan, chief
economist at JVB Financial Group in Boca Raton, Florida.
The release of the U.S. figures was brought forward ahead
of the U.S. Thanksgiving holiday on Thursday.
In currency markets, the worries of a deepening recession
led investors to see the U.S. dollar as a safe haven.
In midday trading in New York the euro was 1.6 percent
lower at $1.2845 <EUR=> .Meanwhile, the dollar last traded
higher against the yen at 95.37 <JPY=> after declining to as
low as 94.62.
The low-yielding Japanese yen, a bellwether of attitudes
toward risk, rose against the euro at 122.82 yen <EURJPY=>,
coming back even after the China rate cut.
(Reporting by John Parry, Ellis Mnyandu and Nick Olivari in
New York; Veronica Brown, Naomi Tajitsu and Brian Gorman in
London; Editing by Leslie Adler)
