LONDON/NEW YORK: Global stocks rose on Friday after a Libya ceasefire reduced tension in the region and the Group of Seven calmed markets about Japan's nuclear crisis, while G7 intervention broke the yen's rise.
Oil fell after Libya declared a cease-fire in the country to protect civilians and comply with a United Nations resolution passed overnight.
"The end of military action is a great step," said Jim Vogel, interest rate strategist with FTN Financial in Memphis, Tennessee. "Now, the market needs to figure out whether this will lead to a quick, visible end game."
Brent crude had surged above $116 a barrel on worries of escalating unrest in oil-rich countries after the UN approved military action to contain Libya's Muammar Gaddafi.
It traded down 0.5 percent at $114.31 a barrel after the cease fire. US crude fell 0.5 percent to $100.88.
The dollar was last up nearly 3 percent at 81.12 yen, retreating from a session high of around 81.98 yen, following the G7 announcement, which came just as the Tokyo stock market opened.
The show of solidarity by the G7 major developed economies to support Japan through its biggest crisis since World War Two comes a day after the yen soared to a record 76.25 per dollar in chaotic trading. It is the first coordinated currency intervention by the G7 in a decade.
The G7 "is just helping sentiment, and stocks sensitive to risk will push on.
But optimism is going to be guarded as there are no firm resolutions surrounding the Japanese nuclear crisis and the Middle East, and anything can happen on the weekend," said Giles Watts, head of equities at City Index in London.
The Dow Jones industrial average jumped 139.18 points, or 1.18 percent, to 11,913.77.
The Standard & Poor's 500 Index was up 13.69 points, or 1.07 percent, at 1,287.41 and the Nasdaq Composite
Index was up 26.28 points, or 1.00 percent, to 2,662.33, having jumped to a session high of 115.50 yen earlier from around 114.70.
Traders noted the scale of intervention was so far a tame effort to stem the yen's surge.
Some market observers said even massive official selling might not restrain the yen for long, pointing to Japan's last intervention in September 2010 when it sold a huge 2.1 trillion yen, or around $25 billion worth, but only managed to push the dollar up from 82.85 to 85.77 yen.
"It would need to be concerted and aggressive.and even then I'm sceptical," said Richard Wiltshire, a currency trader at ETX Capital in London.
A New York Federal Reserve spokesman said the US central bank had joined the G7 in intervening to weaken the yen.
MIDDLE EAST WEIGHS
Japan's Nikkei share index climbed 2.7 percent, recouping some of the week's losses as Japan reeled from the aftermath of an earthquake, tsunami and nuclear power plant crisis World stocks as measured by MSCI gained 1 percent.
European equities pared earlier gains after China's central bank raised lenders' required reserve ratios.
Europe's FTSEurofirst 300 climbed 0.8 percent.
Demand for the safety of government debt eased.
The price drop pushed benchmark US 10 year Treasury note yields 0.04 percentage higher to 3.30 percent.
The UN Security Council passed a resolution endorsing a no-fly zone for Libya.
It authorised "all necessary measures" to protect civilians against Gaddafi's forces.
Gold rise $15.05 to $1,417.40 an ounce but was off a record around $1,444 hit last week.
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