* Stocks rise on Spanish cuts, German growth
* Euro creeps higher as austerity measures debated
* Gold sets record high at $1,244.45 per ounce
(Updates with opening of U.S. markets)
By Albert H. Yoon and Jeremy Gaunt
NEW YORK/LONDON, May 12 (Reuters) - World shares climbed
and the euro strengthened on Wednesday as Germany's economy
continued to grow and Spain outlined measures to cut its
deficit.
MSCI's all-country world stock index <.MIWD00000PUS>
climbed nearly 1 percent, led by Europe, where the FTSEurofirst
300 <> index gained 1.4 percent.
The bullish trading comes two days after world shares
soared nearly 5 percent following an agreement by the European
Union and the International Monetary Fund on a 750 billion euro
rescue package to put an end to Greece's debt crisis. The
steps, for the moment, reduced speculation that other euro-zone
nations would face the same predicament as Greece.
Investors have feared a debt crisis in Greece could spill
over to other euro-zone nations with high borrowings, including
Spain. That concern eased as Spain Prime Minister Jose Luis
Rodriguez Zapatero said Madrid would slash civil service pay by
5 percent this year, freeze it in 2011 and cut 13,000 public
sector jobs this year to meet European Union deficit targets.
"There are certainly those people who will see the steps
taken in Europe as a replay of the type of steps taken in the
United States following the Lehman collapse," said Rick
Meckler, president of investment firm LibertyView Capital
Management in New York. "Ultimately that proved to be
successful in the short run for markets."
The EU/IMF plan has drawn a line under the worst fears
about a spread of the euro zone debt crisis, leaving investors
to look at what countries are doing to improve their finances.
Lingering doubts that the measures will work sparked a flight
to gold, which hit a record high on Wednesday.
The Dow Jones industrial average <> rose 82.15 points,
or 0.76 percent, to 10,830.41. The Standard & Poor's 500 Index
<.SPX> increased 9.32 points, or 0.81 percent, to 1,165.11 and
the Nasdaq Composite Index <> gained 26.72 points, or 1.12
percent, to 2,402.03.
Materials shares supported the market, with
Freeport-McMoRan Copper and Gold Inc <FCX.N> rising 3.1 percent
to $72.40.
As investors shift attention from Europe's sovereign debt
troubles, the focus will return to the U.S. economic recovery,
though analysts predict choppy trading.
"The market has been increasingly conditioned to buy on the
dips now that the situation in Europe has been not resolved but
certainly stabilized in the short term," said Craig Peckham,
equity trading strategist at Jefferies & Co in New York.
EURO FIRMS
The euro <EUR=> gained 0.23 percent to $1.2682 on Wednesday
after Spain announced its austerity measures and data showed
the euro zone economy grew modestly in the first quarter.
Germany's GDP grew for the fourth quarter in a row in the
first three months of 2010, data showed on Wednesday.
Gains in the euro were limited, however, as investors
remain worried about whether weaker euro zone economies can
deliver debt cuts and the impact of austerity measures on
European growth.
The dollar rose against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> up 0.13 percent
at 84.57. Against the Japanese yen, the dollar <JPY=> gained
0.39 percent to 93.04.
U.S. Treasuries prices fell on Wednesday as the euro zone's
attempts to stanch its budget crisis helped stabilize stock
markets and traders braced for a 10-year bond auction.
Benchmark 10-year Treasury note yields rose 0.04 percentage
point to 3.57 percent.
In energy and commodities, U.S. light sweet crude oil
<CLc1> fell 2 cents, or 0.03 percent, to $76.35 per barrel,
and spot gold prices <XAU=> rose $6.50, or 0.53 percent, to
$1238.50. Gold earlier touched a record $1,244.45.
(Additional reporting by Leah Schnurr, Burton Frierson and
Wanfeng Zhou; Editing by Padraic Cassidy)
