(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 18 (Reuters) - Global stocks soared on
Friday on U.S. earnings reports, including results from
Citigroup, that gave investors hope the worst of a sharp credit
crunch that has battered markets for months was over.
Citigroup's earnings eased investor fears of a simmering
U.S. housing-sparked financial crisis. That helped lift the
dollar to a seven-week high against the yen and pulled it
further away from a record low against the euro hit earlier
this week.
But oil hit a lifetime high of $117 a barrel, the fourth
time crude has hit a record peak this week in New York trading.
Investors dumped safe-haven gold, sending prices down 3
percent, as they added positions in riskier bets such as stocks
and crude oil.
Investors drove European stocks to a 10-day high and lifted
the Dow Jones industrial average to a three-month high. Bond
yields rose on both sides of the Atlantic as investors slashed
hopes of interest rate cuts.
Strong earnings at Google Inc <GOOG.O> fueled a rally in
the U.S. technology sector, while robust international sales
helped manufacturers Honeywell International <HON.N> and
Caterpillar Inc <CAT.N> post stronger-than-expected earnings.
The results helped improve a first-quarter earnings picture
that had looked dismal after disappointments last week from
Alcoa Inc <AA.N> and General Electric Co <GE.N>.
The Dow <> rose 228.87 points, or 1.81 percent, to
12,849.36. The Standard & Poor's 500 Index <.SPX> added 24.77
points, or 1.81 percent, to 1,390.33. The Nasdaq Composite
Index <> rose 61.14 points, or 2.61 percent, to 2,402.97.
Google's shares rose 20 percent after the company said late
on Thursday that it saw no impact from a weakening economy as
it posted a better-than-expected quarterly profit and dismissed investor fears of an online advertising slump.
"Google's earnings were just fantastic," said Bruce Zaro,
chief technical strategist at Delta Global Advisors in Boston.
"But often it's the reaction to the earnings that is more
important than the actual earnings themselves. Citi's shares
are probably gaining on the cost-cutting -- it looks as if
these companies are really starting to do what they need to."
Citigroup, the largest U.S. bank, posted a quarterly loss
of $5.1 billion, adding to losses in the previous quarter. But
its shares rose as investors liked company efforts to overcome
credit problems and drive down costs.
Citigroup's shares closed 4.5 percent higher.
"There's a prevailing sentiment that we're getting past the
worst and it's a sentiment that is growing and driving some
improvement in the dollar," said Nick Bennenbroek, head of FX
strategy at Wells Fargo in New York.
The dollar rose against a basket of major trading-partner
currencies, with the U.S. Dollar Index <.DXY> up 0.51 percent
at 71.956. The euro <EUR=> fell 0.52 percent to $1.5812, and
against the yen, the dollar <JPY=> rose 1.12 percent to
103.68.
European stocks rose sharply to their highest close in 10
days, driven by banking shares, which jumped after Citigroup's
results and a potential rights offering at Royal Bank of
Scotland raised hopes the worst of the credit crisis was over.
The FTSEurofirst 300 index <> of top European shares
gained 2.4 percent to 1,325.90 points, its highest close since
April 7. The index is up 5 percent so far in April, putting it
on track for its best month since October 2003.
Banks <.SX7P> were the best-performing sector, rising 3.7
percent. Shares of RBS <RBS.L>, which have dropped about 18
percent this year, rose 4.9 percent. UBS <UBSN.VX> added 5.4
percent and Societe Generale <SOGN.PA> 5.9 percent.
Earlier in Asia, Japan's Nikkei average <> rose for
the fourth straight day, adding 0.6 percent, as Asian shares
found support from encouraging results at Merrill Lynch, whose
$6.5 billion in write-downs on Thursday were in line with
analysts' expectations.
The MSCI's measure of other Asia Pacific stocks outside
Japan <.MIAPJ0000PUS> fell 1 percent.
Markets cut their expectations of a cut in the benchmark
U.S. federal funds rate, reducing chances of a one-quarter
percentage point cut to 88 percent from a fully-priced-in view
in recent weeks. Perceived chances of a one-half point cut are
now zero.
Euro zone government bond yields jumped and the curve
flattened to levels last seen late last year, which sent the
U.S. two-year Treasury note's <US2YT=RR> yield up to as high as
as 2.25 percent, matching the federal funds target rate, before
it fell in late trading to yield 2.1543 percent.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 2/32, with the yield at 3.7332 percent. The 30-year U.S.
Treasury bond <US30YT=RR> was up 7/32, with the yield at 4.5146
percent.
Oil prices rose as jitters over Nigerian oil supplies
outweighed a rally in the dollar and fears of an economic
slowdown in giant energy consumer China.
U.S. light crude <CLc1> settled up $1.83 at $116.96 a
barrel, after hitting a record $117. London Brent crude <LCOc1>
gained $1.49 to $113.92.
Oil prices have more than quadrupled since 2002 as supply
struggles to keep up with booming demand, especially in China
and other emerging economies.
"The bulls still hold the cards," said Mike Fitzpatrick of
MF Global in New York.
Gold fell, trading at a one-week low, and could drop below
$900 before bouncing back to the $960-$970 an ounce range in
the year's second half, said Zachary Oxman, senior trader at
Wisdom Financial in Newport, California.
"It just seems to me that the risk appetite of the market
is back, and people are going full steam out of the safe-haven
place and right back into the risky place," Oxman said.
U.S. spot gold prices <XAU=> fell $21.20, or 2.26 percent,
to $917.70.
(Reporting by Jennifer Coogan, John Parry, Gertrude
Chavez-Dreyfuss in New York and Sitaraman Shankar, Atul
Prakash, Ian Chua and Margaret Orgill in London; Editing by Dan
Grebler)
