Global shares climb to two-week highs on earnings

NEW YORK: Global shares climbed to two-week highs on Thursday as
strong corporate earnings offset weak U.S. economic data but concerns
about Spain's financial troubles drove the euro broadly lower.
Commodities
rallied, with oil prices hitting eight-week highs as Middle East
tension stoked supply concern. Corn and soybeans soared to record highs
after a worsening U.S. farm-belt drought raised fears about a possible
food crisis.
On Wall Street, the S&P 500 index rallied to a fresh 2-1/2-month peak, lifted by a strong full-year outlook from IBM , bullish earnings from eBay
and Qualcomm's expectations for a strong December quarter. European
equities hit four-month highs also on strong corporate results.
The
positive sentiment was tempered, however, by weaker-than-expected
readings on U.S. manufacturing, housing and labor markets. Adding to
investor concern was a spike in Spain's borrowing costs, which
intensified fears Madrid may eventually need a full-blown sovereign
bailout.
"It is baked into stock prices that growth is going to
be slow for a little while," said Giri Cherukuri, head trader at
OakBrook Investments in Lisle, Illinois.
"People are focusing on
individual stocks after earnings and trying to figure out (through)
outlooks how weak the economy really is," he said.
The Dow Jones industrial average ended up 34.66 points, or 0.27 percent, at 12,943.36.
The Standard & Poor's 500 Index closed up 3.73 points, or 0.27 percent, at 1,376.51.
The Nasdaq Composite Index rose 23.30 points, or 0.79 percent, to 2,965.90.
The MSCI world equity index gained 0.8 percent to 315.11. European shares rose 1 percent to end at 1,064.47.
French
industrial conglomerate Alstom, Biotech company Actelion, home
appliances maker Electrolux and AkzoNobel all reported strong results.
The
euro fell 0.1 percent to $1.2276. It also hit a record low against the
Australian dollar and a 3-1/2-year trough versus sterling.
Ten-year
Spanish bond yields rose above the 7 percent line seen as unsustainable
after the country paid euro-era record yields for five-year funding as
investors remain concerned about its finances and growth prospects.
"The
risk is that yields could start rising also in shorter maturities,
where Spain is doing most of the funding, and that will basically be
game over for Spain," said Gianluca Ziglio, a strategist at UBS.
Germany
warned that Spain's financial troubles are far from over and its
government should be ultimately responsible for European aid to its
banks. Finance Minister Wolfgang Schaeuble said the mere perception of insolvency risk in Spain could cause contagion in the euro zone.
COMMODITIES RALLY
Brent
crude gained for a seventh straight day, rising $2.64 to settle at
$107.80 a barrel after an earlier high of $108.18, while U.S. oil
gained $2.79 to end at $92.66.
The killing of several Syrian
security chiefs on Wednesday and a deadly attack on Israeli tourists in
Bulgaria, which Israel accused Iran of carrying out, fueled worries
over the Middle East, source of more than a quarter of the world's oil.
Spot gold rose to $1,581 an ounce, following a rally in oil prices.
Chicago
Board of Trade spot September corn hit a record high $8.12 per bushel.
August soybeans posted a record peak at $17.46-1/2. The month-long
rally was fueled by fears of a food crisis similar to that in 2008,
when riots broke out in some countries.
"I hesitate to use those
words (food crisis) but the circumstances are more severe now than they
were in 2008," said Dennis Gartman, a commodity trader and
editor/publisher of The Gartman Letter.
In U.S. government debt
trading, long-dated Treasury prices fell as investors took a breather
after pushing yields to record lows on worries about slowing global
growth. The benchmark 10-year U.S. Treasury note was down 5/32 in
price, yielding 1.5111 percent.
Factory activity in the U.S.
Mid-Atlantic region contracted for a third straight month in July and
the number of Americans filing new claims for jobless aid surged last
week, data showed on Thursday. A separate report showed U.S. home
resales fell to the lowest level in eight months in June.
"While
we believe that economic conditions have not deteriorated sufficiently
to push the Federal Reserve over the edge, the odds of further policy
action being taken in the near term have clearly risen," said Millan
Mulraine, senior macro strategist at TD Securities in New York. -
Reuters