*Stocks shake off hesitation; rose 0.5 pct after JPM results
*Yen trims gains; Treasuries fall as flight to safety abates
*China Q2 growth reassures
By Sujata Rao
LONDON, July 16 (Reuters) - World stocks shook off their
earlier hesitant mood on Thursday and rose half a percent to
two-week highs after JP Morgan's forecast-beating second quarter
results continued the run of good news on the corporate earnings
front.
JP Morgan <JPM.N> said strength in its core consumer and
investment banking businesses had offset credit losses and
pushed net income per share to $0.28. This compares with a
forecast of $0.05 per share. [].
The news comes on top of strong earnings from sector peer
Goldman Sachs <G.S> and tech giant Intel <INTC.O> this week,
which together with strong Chinese growth data gave investors
some reassurance on the global economy's recovery prospects.
"(JP Morgan results) have given a shot in the arm to the
markets " said Richard Hunter, head of equities at Hargreaves
Lansdown in London.
"It's too early to call the earnings season a success, but
the early signs are positive as evidenced by a shift to risk
taking on both sides of the pond."
By 1130 GMT the FTSEurofirst 300 <> index of top
European shares jumped 0.5 percent, while London's FTSE100
<>, Germany's DAX <> and France's CAC-40 <> rose
between 0.3 percent to one percent.
Banking shares were the biggest beneficiaries, with shares
in BNP Paribas <BNPP.PA>, Lloyds <LLOY.L> and Banco Santander
<SAN.MC> up more than one percent.
MSCI global equities <.MIWD00000PUS> which has been buoyed
six percent so far this week by the good news from Goldman Sachs
and Intel, rose another 0.4 percent after a shaky start to the
session. Emerging stocks rose to new two-week highs <.MSCIEF>.
And Wall Street was braced for a stronger opening, with Dow
Jones Industrial Average stock futures <DJc1> up 4 points while
S&P 500 futures <SPc1> were flat.
As the flight to safety abated, the yen trimmed its early
gains while the euro and sterling hit session highs versus the
dollar.
The euro rose to $1.4137 according to Reuters data, up from
$1.4095 before the announcement. Sterling rose 0.2 percent to
$1.6462 and both currencies relinquished early losses against
the yen to trade roughly flat on the day.
"Traders and investors are buying pro-risk currencies like
sterling and are selling yen after the Q2 earnings from JP
Morgan," said Neil Jones, head of hedge fund sales at Mizuho in
London.
But with a spate of earnings still to come -- including
banking giant Citigroup <C.N> and tech firms IBM and Google
<GOOG.O> -- markets will remain on edge.
"The market needs to see that recovery is there and that
earnings have bottomed," said Bernard McAlinden, investment
strategist at NCB Stockbrokers in Dublin.
"So far we are getting indications of a better-than-expected
second quarter earnings season, although it's very early."
CONTRASTS
Markets were buoyed early in the session by China's second
quarter gross domestic product which rose 7.9 percent against
the previous year, beating forecasts for a 7.5 percent rise.
The world's third-largest economy also grew 7.1 percent in
the first half versus a year earlier. Coming on top of
better-than-expected U.S. data and corporate results, the news
suggested to investors that the recession is abating.
But after an initial jump in Asian shares -- Tokyo markets
<> briefly hit a one-week high and other Asian shares
powered to a month-high <.MIAPJ0000PUS> -- gains were capped by
trepidation about the upcoming results.
Another sobering note was struck by Fitch which cut the
outlook on New Zealand's 'AA-plus' rating to negative, citing
the country's high debt levels and pushing the NZ dollar down
more than 1.2 percent to $0.6413 <NZD=>.
"This... may refocus attention on concerns about sovereign
risk that had been receding for a while," said Masafumi
Yamamoto, head of FX strategy Japan at Royal Bank of Scotland,
referring to sovereign ratings in general.
Markets are also keeping a wary eye on the fate of CIT Group
Inc <CIT.N>, a U.S. lender to thousands of small and mid-sized
businesses, after bailout talks with the government ended, a
move that could drive it to bankruptcy. []
U.S. Treasuries fell after the JP Morgan results, reversing
earlier gains, with 10-year yields <US10YT=RR> rising to 3.60
percent from 3.585 earlier.
Markets are now waiting for weekly U.S. jobless claims to
see how the employment picture is shaping up in the world's
biggest economy.
(Additional reporting by Simon Falush and Brian Gorman in
London; Editing by Chris Pizzey)
