Global stocks rally as China fears dwindle, oil prices steady

Tue Jul 28, 2015 4:38pm EDT
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By Michael Connor

NEW YORK (Reuters) - U.S. and European stock markets climbed 1 percent or more on Tuesday, reversing five days of declines, as investors looked past China's equities sell-off and took buying cues from earnings and mergers news.

Prices of safe-haven government bonds eased, while the dollar rallied on growing expectations the Federal Reserve, in a policy statement due on Wednesday, could take a hawkish bias toward raising interest rates. Oil prices recovered from six-month lows and steadied on hopes U.S. crude stockpiles were shrinking.

Wall Street's Dow Jones industrial average .DJI finished ahead 189.68 points, or 1.09 percent, at 17,630.27, the S&P 500 .SPX rose 25.61 points, or 1.24 percent, to 2,093.25 and the Nasdaq Composite .IXIC added 49.43 points, or 0.98 percent, finishing at 5,089.21, according to preliminary data.

United Parcel Service (UPS.N: Quote) shares rose 4.8 percent and Ford (F.N: Quote) gained 2 percent after each reported higher-than-expected profits. The S&P energy sector index .SPNY added 3 percent.

"The S&P has had five down days in a row and a lot of people are starting to nibble," said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio.

Merger news helped lift European stocks, with the FTSEuroFirst 300 index of leading European shares closing up 1.1 percent at just under 1,546 points .FTEU3.

RSA Insurance Group (RSA.L: Quote) rose 18 percent after Zurich Insurance ZURN.VX said it was considering a bid for the British group. Shares of Kering (PRTP.PA: Quote) surged 5.6 percent after Gucci, the flagship brand of the French group, reported a 4.6 percent increase in underlying second-quarter sales.

The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent. The Shanghai market benchmark .SSEC closed 1.7 percent lower.   Continued...

A man walks past the London Stock Exchange in the City of London October 11, 2013.  REUTERS/Stefan Wermuth