* Wall Street rallies on likely record Wells Fargo profit
* Dollar rises vs yen, cheered by banks, economic outlook
* Bonds slip on rising stocks, easing of jobless claims
* Oil rises on hope better jobless rate to revive economy
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 9 (Reuters) - News that No. 4 U.S. bank
Wells Fargo will report record first-quarter earnings sparked a
rally on Wall Street and lifted the dollar on Thursday on hopes
a sector that sparked the global financial crisis is healing.
Oil prices rose almost 6 percent, fueled by the equity
rally and by data that showed the number of American workers
filing new claims for unemployment benefits fell last week.
U.S. Treasury debt prices fell in an abbreviated session
before the Easter weekend and U.S. gold futures finished with
modest losses as rising expectations that economic recovery was
on the horizon hurt the appeal of traditional safe-havens.
The rally in global stocks capped a fifth straight week of
gains among the major U.S. stock indexes, including the Dow and
and S&P 500, and MSCI's world equity index <.MIWD00000PUS>.
Investor confidence got a boost early in the day when
Japan's ruling party said it would increase long-term lending
to companies by a government-affiliated bank by 8 trillion yen
($80 billion). For more see [].
U.S. economic reports, including the jobless claims, gave
investors more reason to cheer.
Data showing the U.S. trade deficit shrank in February to
its smallest since November 1999 backed a view that the drop in
first-quarter gross domestic product was probably not as steep
as the previous period's 6.3 percent annual pace of decline.
But it was Well Fargo <WFC.N> that boosted sentiment the
most after the San Francisco-based bank said it expects to
report net income of about $3 billion for the first quarter.
The bank's estimate was more than twice what analysts
expected on average and suggested that banks with traditional
lending might ride out the recession better than expected.
Wells Fargo shares jumped 32 percent and lifted the
battered banking sector, with the KBW Banks index <.BKX>
climbing 20 percent.
JPMorgan Chase <JPM.N> gained 19.4 percent, making it the
biggest contributor to the Dow, followed by American Express
<AXP.N>, up 19.8 percent. Bank of America <BAC.N> soared 35
percent to $9.55 a share. Citigroup <C.N> only climbed 12.6
percent and remains mired at barely $3 a share.
The banking sector has been a key gauge of market sentiment
worldwide as banks have been at the heart of the global crisis.
The current rally was sparked in March when several major banks
said they had made money in the first two months of the year.
"This news is good news," Keith Wirtz, chief investment
officer at Fifth Third Asset Management in Cincinnati, said
about Wells Fargo's preliminary results.
"We think that there are at least enough signs in the
positive category to give us hope that economic conditions may
be flooring (and) the capital markets quite likely will be
establishing a floor as well," he said.
The CBOE volatility index <.VIX> ended down 5.1 percent at
36.87, its lowest close since September.
The Dow Jones industrial average <> closed up 246.27
points, or 3.14 percent, at 8,083.38. The Standard & Poor's 500
Index <.SPX> gained 31.40 points, or 3.81 percent, at 856.56.
The Nasdaq Composite Index <> rose 61.88 points, or 3.89
percent, at 1,652.54.
European shares closed higher, buoyed by the positive news
from Wells Fargo and U.S. economic data. The FTSEurofirst 300
<> index of top European shares rose 2.1 percent to close
at 778.39 points, its fifth straight weekly gain.
Barclays <BARC.L> rose 12.5 percent after it said it was
selling its iShares asset management business to private equity
firm CVC Capital Partners [] for 3 billion pounds ($4.4
billion) in a deal that will be 70 percent funded by the
British bank. []
The dollar rose against the yen on Wells Fargo and the
economic data.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.49 percent at 85.649. Against
the yen, the dollar <JPY=> rose 0.68 percent at 100.39.
The euro <EUR=> fell 0.74 percent at $1.316.
"The Wells Fargo news was tremendous and everyone seems to
be looking at a positive first quarter in the U.S.," said
Melvin Harris, a market strategist at Advanced Currency Markets
in New York. Wells Fargo and the jobless claims report "have
pushed risk appetite dramatically higher," he said.
Debt prices fell.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
17/32 in price to yield 2.92 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 2/32 in price to yield 0.97 percent.
"Stock markets have been remarkably buoyant. The less
pessimistic mood means investors are more interested in risk
assets generally, and less so in government bonds," said
Everett Brown, rates strategist at IDEAGlobal in London.
Oil, which rose, has closely tracked stocks this year as
investors seek signs that economic recovery would boost
demand.
U.S. crude <CLc1> rose $2.86 to settle at $52.24 a barrel,
while London Brent rose <LCOc1> $2.47 to $54.06.
Gold for June delivery <GCM9> eased $2.60 to settle at
$883.30 an ounce in New York.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Reporting by Gertrude Chavez-Dreyfuss, Burton Frierson in New
York and Joe Brock and Jan Harvey in London; writing by Herbert
Lash, Editing by Chizu Nomiyama)
