NEW YORK: Global stocks hit a seven-week high on Monday and commodity prices rallied on optimism European leaders were moving closer to resolving their debt crisis, while Chinese data eased fears of an abrupt slowdown in the world's second-largest economy.
The euro, however, slipped from a six-week high against the dollar. It reversed early gains as investors remained worried about sharp differences over the extent of losses private holders of Greek bonds will have to accept.
European Union leaders neared agreement over the weekend on bank recapitalization and on how to leverage their rescue fund to try to stop bond market contagion. But final decisions were deferred until a second summit on Wednesday.
"There is still a lot of hope that a solution out of Europe this time will last, and that is sending the market higher to break above trading ranges," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
MSCI's all-country world stock index was up 1.4 percent, after hitting its highest level since early September. Emerging market shares rallied 3.1 percent.
European shares rose 1.0 percent. Earlier, Japan's Nikkei added 1.9 percent.
US stocks rose, adding to three weeks of gains for the S&P 500 index after strong earnings from Caterpillar and a number of proposed acquisitions boosted investor appetite for risky assets.
The Dow Jones industrial average was up 60.10 points, or 0.51 percent, at 11,868.89. The Standard & Poor's 500 Index was up 11.52 points, or 0.93 percent, at 1,249.77. The Nasdaq Composite Index was up 49.41 points, or 1.87 percent, at 2,686.87.
CHINA DATA
Further boosting sentiment was a rise above the 50 level in China's flash purchasing managers' index, suggesting a rebound in manufacturing in the world's second-largest economy after three months of contraction. See
The encouraging Chinese data lifted commodity prices across the board. Benchmark copper on the London Metal Exchange rallied 5 percent. China consumes 35-40 percent of global metals supply, making it a key factor for industrial metals prices.
Spot gold last traded at $1,654.79 an ounce, after falling more than 2 percent last week.
Brent crude was up 98 cents at $110.54 a barrel, down from an intraday high at $110.94. US crude rose $2.04 to $89.44 a barrel, after reaching an intraday high of $89.57.
The euro last traded 0.1 percent lower at $1.3888.
The dollar fell against the yen, trading close to a record low hit on Friday and leaving traders on alert for possible renewed currency intervention to stem strength in the Japanese currency.
Finance Minister Jun Azumi said on Monday that Japan will take decisive action on excessive and speculative forex moves. He said a dollar below 76 yen did not reflect economic fundamentals.
German government bond prices rose, with investors unconvinced plans on the table at a midweek European summit would fortify the European Financial Stability Facility enough to tackle the euro zone debt crisis.
"All eyes are looking at Wednesday's possible answers. We are still not sure how the EFSF would work. This leaves a wide range of options open," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.
Longer-dated US Treasuries prices rose. The 30-year bond rose 17/32 to yield 3.24 percent, down 2 basis points from late Friday. The benchmark 10-year US Treasury note was unchanged, its yield at 2.2157 percent.
Copyright Reuters, 2011
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