* Dow, S&P 500 set new 2011 highs as global stocks surge
* Bond prices gain before 2-year note auction, Fed meeting
* Gold, silver retreat from record highs, oil treads water
* No respite seen for US dollar as euro hits 16-month high
(Adds close of European markets)
By Herbert Lash
NEW YORK, April 26 (Reuters) - World stocks surged toward
three-year highs on Tuesday and the U.S. dollar eased against
the euro as investors bet the U.S. Federal Reserve will keep
its easy monetary policy in place at its meeting this week.
Wall Street extended gains, with the Standard & Poor's 500
Index and Nasdaq rising as much as 1 percent at midday, helped
by solid earnings at Ford Motor Co <F.N>, 3M Co <MMM.N> and
United Parcel Service <UPS.N>. For details
see:[]
Investors are focused on the U.S. central bank's first
scheduled briefing with reporters in its 97-year history,
which will cap the end on Wednesday of a two-day meeting of
the policy-setting Federal Open Market Committee.
Markets were buoyed by a view that even as the Fed nears
the end of its second phase of bond buying, a program known as
quantitative easing, or QE2, it will hold on to its portfolio
and its current level of monetary accommodation for some
time.
"There will probably not be a QE3, but they will probably
not withdraw QE2 either. They are going to leave their balance
sheet at this level for some time," said Constance Hunter,
chief economist of Aladdin Capital Holdings in Stamford,
Connecticut.
MSCI's all-country world stock index <.MIWD00000PUS> rose
as much as 0.67 percent, climbing to a fresh 2011 peak of
352.31 -- a level last seen in mid-2008. At midday in New
York, the index was up 0.62 percent at 352.14.
U.S. government debt prices rose before the auction of $35
billion in two-year notes later in the session and ahead of
Fed Chairman Ben Bernanke's highly anticipated news conference
on Wednesday. For details see: []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 8/32 in price to yield 3.34 percent.
"Investors are unlikely to learn from Bernanke when the
Fed will tighten as it is doubtful that he himself knows,"
said Marc Chandler, global head of currency strategy at Brown
Brothers Harriman in New York.
The Fed is expected to say it will complete its $600
billion bond-buying program, which is scheduled to end in
June. []
If the Fed were to surprise the market and turn more
hawkish, it would pose a risk to the sizable amount of dollar
shorts in the currency market, analysts said.
The InterContinental Exchange's U.S. dollar index <.DXY>,
which measures the dollar's performance against a basket of
major currencies, was down 0.22 percent at 73.825, while the
euro <EUR=> was up 0.40 percent at $1.4638.
Both the S&P 500 and the iconic Dow Jones industrial
average set new intraday highs for 2011 while climbing to near
three-year peaks. The S&P 500 is up 7 percent for the year.
The Dow hit an intraday high at 12,605.36, while the S&P 500
reached an intraday high at 1,349.55.
Investors were cheered by a report that showed consumers
felt better about the short-term outlook. The Conference
Board, an industry group, said its index of consumer attitudes
rose to 65.4 in April from a revised 63.8 in March.
[]
The Dow Jones industrial average <> was up 116.85
points, or 0.94 percent, at 12,596.73. The Standard & Poor's
500 Index <.SPX> was up 12.73 points, or 0.95 percent, to
1,347.98. The Nasdaq Composite Index <> was up 24.55
points, or 0.87 percent, at 2,850.43, after earlier hitting a
fresh 52-week high of 2,856.61.
Crude oil rebounded slightly, while silver and gold
tumbled after pushing to new highs in the case of gold early
Monday. []
North Sea Brent crude futures <LCOc1> fell 2 cents to
$123.64 a barrel.
U.S. crude futures <CLc1> slid 59 cents to $111.69 a
barrel.
Silver was set for its largest one-day fall in six weeks
after having hit fresh 31-year highs, while gold came under
pressure from investor uncertainty over the likely course of
U.S. monetary policy. []
Spot silver <XAG=> fell as much as 4.9 percent to a
session low of $44.63 an ounce, after having risen on Monday
to within 17 cents of the record $49.48 set in January 1980.
Gold <XAU=> hit a record high of $1,518.10 a troy ounce on
Monday but slipped to $1,501.
"The rally has been strong. It's not surprising to see
profit-taking ahead of the FOMC meeting," said Peter Fertig, a
consultant at Quantitative Commodity Research.
"Markets expect it will be a dovish statement from the
U.S. Fed, but there are worries about them ending
(quantitative easing) ahead of time," Fertig said.
European shares rose for the fourth straight session and
hit a two-week closing high, boosted by corporate results in
both the United States and Europe, including those of Swiss
bank UBS <UBSN.VX>. []
The FTSEurofirst 300 <> index of top European shares
rose 0.3 percent to end the day at 1,145.96 points, the
highest close since April 11.
(Reporting by Julie Haviv, Edward Krudy, Ellen Freilich;
Amanda Cooper, Brian Gorman and Ikuko Kurahone in London;
Writing by Herbert Lash; Editing by Jan Paschal)
