World shares at three-month high on U.S. budget deal hopes

NEW YORK Wed Dec 19, 2012 12:33am IST

Traders work on the floor of the New York Stock Exchange, December 12, 2012. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, December 12, 2012.

Credit: Reuters/Brendan McDermid

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

NEW YORK (Reuters) - Global stocks advanced to their highest levels since September on Tuesday on signs of compromise in U.S. talks to stop automatic tax hikes and spending cuts that could hurt the economy next year.

With confidence rising that lawmakers would avert the "fiscal cliff," investors shifted funds to stocks and the euro and pulled away from assets traditionally viewed as safe harbors like bonds, gold and the U.S. dollar. The euro hit a 7-1/2 month high against the greenback.

Wall Street rallied, putting the S&P 500 on track for its best two-day run in a month, as investors gained confidence that federal budget talks were progressing, even as significant differences separated Democrats and Republicans in Washington.

The gains followed a rally on Monday that lifted the S&P 500 to its highest point in nearly two months. Investors remain confident Washington will come to an agreement.

President Barack Obama's most recent offer makes concessions to the Republicans on taxes and entitlement spending, but House Speaker John Boehner said the offer is "not there yet," though he remains hopeful of an agreement. Senate Democrats have expressed concern about entitlement cuts, particularly to Social Security.

"As you get more and more clarity and dialogue that there will be a compromise to avoid a fiscal cliff, I think the markets are going to rally," said Weston Boone, vice president of listed trading at Stifel Nicolaus Capital Markets.

"What's holding this market back - the S&P 500 - from continuing to reach higher highs is the macro headwinds, and a lot of that emanates from (Washington) D.C."

For a second day, banks led the rally on Wall Street. Goldman Sachs Group was up 3.1 percent and Morgan Stanley gained 2.9 percent after Jefferies Group reported a higher-than-expected adjusted quarterly profit. Jefferies was up 3 percent to $18.79. The S&P 500 Financial Index climbed 1 percent.

The Dow Jones industrial average was up 103.36 points, or 0.78 percent, at 13,338.75 in afternoon trading. The Standard & Poor's 500 Index was up 13.46 points, or 0.94 percent, at 1,443.82. The Nasdaq Composite Index was up 37.41 points, or 1.24 percent, at 3,048.02.

European shares ended higher, with a key index closing just a few points below its 2012 high.

The euro rose to its highest in more than seven months against the dollar and hovered near a nine-month peak versus the yen as market players sold the safe-haven dollar.

Oil prices rose. Front-month Brent crude oil prices gained $1.03 to $108.67 a barrel, briefly topping the 14-day moving average of $108.87 a barrel. U.S. crude oil futures gained 76 cents to trade at $87.97 a barrel, breaking above the 50-day moving average of $87.64 a barrel after testing that level during Monday's trade.

The benchmark 10-year U.S. Treasury note was down 12/32, with the yield at 1.8153 percent. U.S. 30-year Treasuries bond prices fell a full point. The bonds were last down 27/32 in price to yield 2.99 percent, after rising as high as 3.001 percent. The debt closed on Monday at yields of 2.95 percent.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

RAINFALL THIS YEAR

REUTERS SHOWCASE

Election 2014

Election 2014

Thousands mob Modi as election race starts in Varanasi.  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage