* Stocks in Europe and Japan falter, U.S. gains
* Dollar rises on risk aversion
* EU proposes fiscal stimulus after Fed's $800 bln plan
(Recasts, adds quotes, updates prices)
NEW YORK, Nov 26 (Reuters) - U.S. stocks rallied on
Wednesday, as investors found value in beaten down technology
shares and energy shares rose on higher crude oil prices, while
European markets fell on fears about a deep global recession.
A fresh wave of weak U.S. economic data drove safe-haven
buying in U.S. government bonds and lifted the U.S. dollar.
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 []. A separate report,
showed sales of newly built U.S. homes dropped sharply in
October and were running at levels last seen more than 17 years
ago. See []
"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 1.08 percentage points, a
move aimed at ensuring liquidity in the banking system and
supporting economic growth.
But the positive reaction to the financial resuscitation
efforts and perceptions of some value in stocks which are now
at multi-year lows were offset by concern about the cost to
governments of the banking system bailouts and economic
stimulus plans being announced around the world.
In U.S. equities markets, the Nasdaq index <> rose
4.60 percent, outpacing gains in the other major indexes, as
value investors bought shares of big-cap technology companies
betting that Tuesday's sell-off was too far, too fast.
"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 Corp. <CVX.N> was among advancing stocks in the
Dow, rising 3.0 percent as the price of oil popped above $54 a
barrel even after data showed an increase in oil inventories.
As New York closed, the Dow Jones industrial average
<> was up 244.4 points, or 2.88 percent, at 8,723.51. The
Standard & Poor's 500 Index <.SPX> was up 29.99 points, or 3.50
percent, at 887.38. The Nasdaq Composite Index <> ended
up 67.37 points, or 4.60 percent, at 1,532.10.
The attacks in Mumbai, India on Wednesday had no impact on
world stocks, traders said.
U.S. markets are closed Thursday for the Thanksgiving
holiday.
Cisco Systems <CSCO.O>, the networking equipment maker,
rose 5.5 percent to $16.27 on Nasdaq, a day after the stock led
a tech sell-off on worries about faltering demand.
Dow component General Motors Corp. <GM.N> advanced 33
percent to $4.75, after Deutsche Bank said the prospects of
U.A. automakers getting a bailout had improved.
[]. Ford Motor Co. <F.N> rose 29 percent to $2.15.
Citigroup <C.N> jumped 19.7 percent to $7.27 after news
that a Mexican brokerage controlled by billionaire Carlos Slim
recently bought $150 million of Citi shares.
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. Britain's economy shrank at its fastest rate since 1990
in the third quarter, data showed.
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.
Tokyo's Nikkei 225 index earlier fell 1.3 percent <>.
Toyota Motor Corp <7203.T> had its top-notch credit rating cut
for the first time in a decade. []
World stocks as measured by the MSCI index were 1.6 higher
<.MIWD00000PUS> helped by gains in U.S. technology stocks.
YEN STILL FAVOURED
Bond investors paid record premiums to insure against a
U.S. default on its Treasury debt, showing nagging worries
about the unprecedented scale of the bailouts. []
Investors still bought U.S. bonds after the weak economic
data, however, with the yield on the benchmark 10-year note
hitting a five-decade low.
"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 late trading in New York the euro was 1.2 percent lower
at $1.2902 <EUR=> , while the dollar last traded higher against
the yen at 95.75 <JPY=>.
(Reporting by Chris Reese, Ellis Mnyandu and Nick Olivari in
New York; Veronica Brown, Naomi Tajitsu and Brian Gorman in
London)
