* Euro boosted as Germany may buy Greek bonds via KfW
* Traders cover extreme short position' in euro
* European stocks rose on US data, but Wall Street flat
By Emily Flitter
NEW YORK, Feb 26 (Reuters) - European stocks and crude oil
rose as the United States reported the economy grew more
strongly in the fourth quarter than it had previously
estimated, but U.S. stocks see-sawed as Wall Street took a
dimmer view of the latest data.
The dollar fell against major currencies as traders sold
the greenback to cover extreme euro short positions as worries
over Europe's debt crisis eased, a day after the euro fell to a
one-year low against the yen.
The euro hit a session high after Bloomberg reported that
Germany may buy Greek bonds through lender KfW Group. Reuters
had reported on Feb. 11 that Germany was considering using KFW
to buy Greek debt. ID:nBAT005115
Greece has been at the center of the euro's struggles the
last few months, with its fiscal debt this year estimated at
more than 120 percent of gross domestic product, the highest of
any euro zone member.
In mid-day trading Friday, the euro EUR=> was up 0.45
percent at $1.3616 from a previous session close of $1.3555.
Against the Japanese yen, the dollar JPY=> was down 0.25
percent at 88.85 from a previous session close of 89.070.
World stocks measured in the MSCI All-Country World Index
.MIWD00000PUS was up 0.75 percent.
"The bigger narrative remains in Europe and in the absence
of negative news today we are seeing the euro consolidating a
bit. The gains seem to be a result of short-covering" on the
euro, said Greg Salvaggio, senior vice president for capital
markets at Tempus Consulting in Washington.
"Whatever anxieties (about Greece) we have are already
priced in, at least based on what we know," said Warren West,
principal at Greentree Brokerage Services in Philadelphia.
Oil prices rose as much as 2 percent to trade near $80 a
barrel after the upward revision in the U.S. gross domestic
product data helped revive lackluster sentiment.
The government reported the economy grew at a 5.9 percent
annual pace in the fourth quarter, revised from the previous
estimate of growth of 5.7 percent. But the data showed that
consumer spending the residential investment were lackluster.
ID:nN25113351.
An industry report that existing home sales fell 7.2
percent last month also dented sentiment on Wall Street.
ID:nN26167386
The Dow Jones industrial average .DJI> was down 5.74
points, or 0.06 percent, at 10,315.29. The Standard & Poor's
500 Index .SPX> was down 0.68 points, or 0.06 percent, at
1,102.26. The Nasdaq Composite Index .IXIC> was down 2.46
points, or 0.11 percent, at 2,231.76.
Volume was light as a major snowstorm blanked the East
Coast.
"There was a lot of economic data this morning, most of
them worst than expected," said Peter Jankovskis, co-chief
investment officer at OakBrook Investments LLC in Lisle,
Illinois. "Offsetting that is the fact that the dollar has
declined somewhat and in general, when the dollar has been
declining, that's positive for equities.
The dollar was down against a basket of major
trading-partner currencies, with the U.S. Dollar Index .DXY>
down 0.60 percent at 80.306 from a previous session close of
80.787.
The pan-European FTSEurofirst 300 .FTEU3> index of top
shares closed up 1.1 percent at 1,007.51 points.
European bank and commodity stocks led the share price
gains as metal and oil prices rose.
U.S. crude oil futures rose, and global stock and
commodities' prices were firmer, boosting commodity-linked
currencies such as the Australian and New Zealand dollars.
U.S. light sweet crude oil CLc1> rose $1.59, or 2.03
percent, to $79.76 per barrel, and spot gold prices XAU=> rose
$10.20, or 0.92 percent, to $1115.90. The Reuters/Jefferies
CRB Index .CRB> was up 3.26 points, or 1.2 percent, at 274.13.
U.S. Treasury debt prices were higher.
The benchmark 10-year U.S. Treasury note US10YT=RR was up
7/32, with the yield at 3.6061 percent. The 2-year U.S.
Treasury note US2YT=RR was up /32, with the yield at 0.8157
percent. The 30-year U.S. Treasury bond US30YT=RR was up 20/32,
with the yield at 4.5414 percent.
(Additional reporting by Lynn Adler, Luciana Lopez and
Gertrude Chavez-Dreyfuss in New York and Natsuko Waki in
London; Editing by Leslie Adler)
