World stocks rally on economy, Spanish auction
By Rodrigo Campos
NEW YORK (Reuters) - Global stocks posted their strongest gains in three weeks and the euro rose on Tuesday on signs of improved economic prospects in Germany and the United States as well as a better-than-expected Spanish debt auction.
U.S. stocks jumped, led by materials and energy shares as commodity prices also rallied. Wall Street also got a boost from a 1-1/2 year high in housing starts and permits for future construction that suggested the housing market was starting to recover.
Still, traders were cautious about developments that could add to Europe's financial crisis, while the thin trading volume near year's end was expected to keep markets volatile.
"Anything that qualifies as a positive datapoint in Europe has an outsized positive reaction in global markets," said Jim Russell, regional investment manager for U.S. Bank Wealth Management in Cincinnati.
Dealing with the debt crisis is a two steps forward, one step back process for Europe, with Tuesday a clear move forward, he said.
Markets have hinged on European headlines for months, as an escalating sovereign debt crisis threatens to take down the bloc's economy.
Defying weak expectations, German business morale rose sharply in December, underscoring the resilience of Europe's biggest economy.
The euro gained about 0.6 percent to $1.3086 , but it was down from a session high of $1.3131. Continued...