Euro, stocks up on data, U.S. earnings

Tue Oct 16, 2012 5:59pm EDT
 
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By Rodrigo Campos

NEW YORK (Reuters) - World shares rose for a second day on Tuesday and the euro gained against the U.S. dollar as concern over U.S. corporate earnings eased and German economic data improved.

The euro jumped near $1.31 after market hours in New York to its highest since September 18 after rating agency Moody's affirmed its investment grade sovereign rating on Spain. Markets had feared that a downgrade could have forced some holders of Spanish debt to sell, further lifting Madrid's borrowing costs.

Reports that Spain may be close to seeking a bailout and that Greece may receive more financial aid stoked investors' appetite for riskier assets, with European shares closing up more than 1.0 percent, led by financial stocks.

U.S. stocks rose after stronger-than-expected earnings from big-name companies. Johnson & Johnson and UnitedHealth Group both increased their full-year profit forecasts while Goldman Sachs raised its dividend.

"One of the biggest things coming into this earnings reporting season was this drum beat for how bad it was going to be," said Art Hogan, managing director of Lazard Capital Markets in New York.

"We've got a chance to get some of that back because the worst-case scenario is not playing out."

The Dow Jones industrial average .DJI rose 127.55 points, or 0.95 percent, to 13,551.78. The S&P 500 .SPX gained 14.79 points, or 1.03 percent, to 1,454.92. The Nasdaq Composite .IXIC added 36.99 points, or 1.21 percent, to 3,101.17.

Citigroup's Vikram Pandit quit as chief executive after months of tension with the board in a move that surprised investors and employees of the third-largest U.S. bank. Citi's shares closed up 1.6 percent.   Continued...

 
Traders work on the floor of the New York Stock Exchange at the opening of the trading session in New York October 5, 2012. REUTERS/Mike Segar