GLOBAL MARKETS-Cheap stocks stoke buying, Spain yields hit record

NEW YORK: Stocks on world markets rose on Tuesday as battered shares
attracted traders and the euro rose after three days of losses, but the
euro's gains were capped record-high yields of Spanish bonds on
continued worries about the effectiveness of Madrid's bank bailout and
the looming Greek elections.
Wall Street stocks rose more than 1
percent, led by cyclical sectors, while U.S. crude oil futures jumped
after three days of declines.
Spanish benchmark bond yields rose
sharply but came off an earlier high that marked a record since the
1999 launch of the euro. Concern over how difficult it may be for
Madrid to access debt markets in the long term after its banks are
bailed out kept investors at bay.
The structure of the bailout,
agreed over the weekend, has not been confirmed. Current holders of
Spanish debt fear the expected debt issuance that is part of the
bailout would have a higher repayment priority than regular government
bonds.
Concerns that Greece's upcoming elections on Sunday would
bring to power parties opposed to its own bailout plan and force a
disorderly exit from the euro zone were rekindled by a report EU
officials were considering ways to manage fallout from such an event.
"We are just being held hostage by all the news flow," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.
"Right
now everyone has got a pretty short-term trading mentality," he said.
"You have to be ready to abandon your thoughts and change your mind at
a moment's notice.
At the closing bell in New York, the Dow
Jones industrial average was up 162.57 points, or 1.31 percent, to
12,573.80. The S&P 500 Index gained 15.25 points, or 1.17 percent,
to 1,324.18. The Nasdaq Composite added 33.34 points, or 1.19 percent,
to 2,843.07.
MSCI's world equity index rose 0.7 percent and the
euro zone's blue-chip Euro STOXX 50 index closed up 0.27 percent. U.S.
dollar-denominated Nikkei futures added 1.1 percent.
The euro
edged above $1.25 to gain more than 0.3 percent on the day versus the
greenback. Relative strength in the common currency is seen as
short-lived ahead of the Greek election.
"Selling into strength
should continue to be the market's mentality and nobody will be
comfortable holding risk headed into this upcoming weekend," said Dean
Popplewell, chief currency strategist at OANDA in Toronto.
The
growing impact of the euro zone crisis on the economic outlook was
underlined by data showing a surprise fall in British manufacturing
output in April.
Global growth concerns also pushed Brent crude
oil prices down 0.9 percent to $97.14 a barrel. U.S. oil was up 0.8
percent at $83.36 a barrel after earlier hitting a one-year low at
$81.07.
Market volatility prompted selling in copper, with
three-month copper on the London Metal Exchange at $7,395 a tonne, 0.3
percent below the $7,420 at the close on Monday, when it rose 1.7
percent.
U.S. Treasuries prices fell as investors prepared for
new sales of longer-dated Treasuries on Wednesday and Thursday, with
losses accelerating after a three-year note auction drew relatively
weak demand.
The benchmark 10-year U.S. Treasury note was down 23/32, the yield at 1.6642 percent. - Reuters