(Updates with U.S. markets, European close)
By Pedro Nicolaci da Costa
NEW YORK, April 2 (Reuters) - Stocks around the world
gained on Wednesday as fears eased about the global credit
crisis amid hopes that write-downs by banks could be coming to
an end.
The optimism on the credit crisis also buoyed the dollar
against the yen, as investors' appetite for risk grew and as
Federal Reserve Chairman Ben Bernanke said growth should pick
up as the impact of the U.S. central bank's aggressive interest
rate cuts are felt.
Battered financial stocks have rallied in the last two days
after Lehman Brothers Holdings <LEH.N> raised $4 billion of
capital on Tuesday, quelling some speculation that the
investment bank may be in trouble.
"Risk plays are being put back on," said Ron Simpson,
director of currency research at Action Economics in Tampa,
Florida. "A little bit of fear has gone out of the market on
things that happened yesterday."
Lehman's share offering came as Swiss bank UBS announced
$19 billion in write-downs, which has raised hopes for
investors that banks were aggressively cleaning up their
books.
Comments by Bernanke in congressional testimony on
Wednesday that growth should pick up overshadowed his remarks
that the United States could face a mild recession in the first
half of 2008.
In U.S. stock markets, bargain-hunting drove financial
shares higher as the credit fears ebbed.
"Financials are so cheap that they are crowding out the
other sectors and making them look expensive," said Jack Ablin,
chief investment officer with Harris Private Bank in Chicago.
"I still need financials to outperform the rest of the S&P
by about 11 percent for me to confirm that most of the troubles
are behind us, though."
The Dow Jones industrial average <> was down 14.74
points, or 0.12 percent, at 12,639.62. The Standard & Poor's
500 Index <.SPX> was up 2.62 points, or 0.19 percent, at
1,372.80. The Nasdaq Composite Index <> was up 11.06
points, or 0.47 percent, at 2,373.81.
Citigroup Inc <C.N>, the largest U.S. bank by assets, gave
the biggest boost to the Standard & Poor's 500 Index after
having been battered by the eight-month-long lending crisis. It
shares were up 1.7 percent at $24.25.
Financial services company CIT Group Inc <CIT.N> was the
top percentage gainer on the New York Stock Exchange, up 9
percent at $14.08, only nine days after the firm drew down $7.3
billion of credit lines to stay afloat.
UBS WRITE-DOWN AGAIN BOOSTS EUROPEAN SHARES
In Europe, bank shares rallied for a second straight day.
The FTSEurofirst 300 index of top European shares closed up
1.18 percent at 1,317.84 points, its highest close in five
weeks.
Banks were the top performers, with Commerzbank <CBKG.DE>
up 6.1 percent, UBS <UBSN.VX> up 4.9 percent and Credit Suisse
up 5.8 <CSGN.VX> percent.
Analysts said people had long wanted banks to recapitalize
and that UBS's write-down represented a willingness to do just
that, making it a welcome relief.
"The immediate reaction to that has been positive because
it puts banks in a stronger financial position than they were
in previously," said Darren Winder, equity strategist at
Cazenove. "And the positive share price reaction I think is
leading investors to speculate whether the same could be
expected with other banks."
In Japan, the Nikkei stock average surged 4 percent to a
one-month peak on gains in banks. Shares of the country's top
lender, Mitsubishi UFJ Financial Group <8306.T>, posted their
biggest one-day gain since July 2004
In the U.S. government bonds market, Bernanke's assessment
that growth would quickly rebound prompted some investors to
cut back on their expectations for further aggressive rate
cutting by the Fed, pushing short-dated bond prices lower.
Bernanke "is boosting confidence generally in the Federal
Reserve's handling of monetary affairs overall, and that may
translate into a need for less future rate cuts -- that is what
the market is saying," said David Dietze, chief investment
strategist at Point View Financial Services in Summit, New
Jersey.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 11/32, with the yield at 3.5982 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 9/32, with the yield at
1.9428 percent.
The dollar was up 0.9 percent at 102.76 yen <JPY=>, close
to the day's high of 102.78 yen. The euro <EUR=> was little
changed at $1.5613, well off last month's record high around
$1.5905.
In commodities markets, crude oil prices dipped in choppy
trade after government data showed a larger-than-expected rise
in crude inventories, while gasoline supplies also fell more
than forecast.
On the New York Mercantile Exchange, May crude oil <CLK8>
was down 11 cents at $100.87 per barrel.
Gold rebounded to trade in a tight range after a sharp drop
in prices to two-month lows in the previous session encouraged
bargain hunters and investors to snap up the metal.
(Reporting by Pedro Nicolaci da Costa; Additional reporting by
Nick Olivari; Editing by Leslie Adler)
