* World stocks rise, boosted by U.S. tax deal
* Euro gains on Ireland budget hopes
* Commodities fall from multiyear highs
(Updates with U.S. markets open)
By Manuela Badawy and Dominic Lau
NEW YORK/LONDON, Dec 7 (Reuters) - Global stocks jumped on
Tuesday, boosted by a compromise deal to extend expiring U.S.
tax cuts, while the euro rose on optimism that Ireland's
lawmakers will pass the toughest budget ever.
Copper prices hit a record high, supported by Chinese
buying and a firmer euro. Gold also hit a record at $1,430.95
an ounce before easing, while oil prices rose to a 26-month
high on demand for heating fuel in parts of Europe and the
United States.
U.S. government bonds dropped as the tax deal was seen as a
stimulus for the economy, benefiting stocks, commodities and
other risky assets.
Despite its rise, the euro was vulnerable, with European
policymakers divided over how to tackle the region's debt
problem.
U.S. President Barack Obama unveiled a deal late on Monday
to renew tax cuts for the middle class as well as for wealthy
Americans, as Republicans wanted. For details see
[]
The announcement was welcomed by the markets as investors
bet that the tax breaks would prompt increased spending and
buoy the economy as well as lessen chances investors would sell
shares.
"U.S. activity is reliant on consumer spending, so any move
to help consumer start spending money, particularly in the
Christmas period, is going to be seen as positive for the
markets," said Joshua Raymond, market strategist at City Index
in London.
The Dow Jones industrial average <> was up 58.08
points, or 0.51 percent, at 11,420.27. The Nasdaq Composite
Index <> was up 12.90 points, or 0.50 percent, at
2,607.82.
The Standard & Poor's 500 Index <.SPX> was up 5.79 points,
or 0.47 percent, at 1,228.91, after touching a new 2010
intraday high at 1,234.83. Global stocks measured by MSCI
All-Country World Index <.MIWD00000PUS> rose 0.87 percent.
Europe's FTSEurofirst 300 <> index of top shares rose
to a 26-month high with commodity stocks gaining on strong
crude oil and metals prices.
Meanwhile, the euro <EUR=> was up 0.44 percent at $1.3363
as investors expected that Ireland will pass an austerity
budget later on Tuesday.
The dollar was up at 83.140 yen <JPY=> after slipping to a
three-week low against the Japanese currency earlier in the
session. The renewed strength in the yen dragged Japan's Nikkei
225 <> down 0.3 percent.
Clouding the euro's outlook, euro zone policymakers failed
to agree on new policies to tackle the region's debt crisis.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.18 percent at 79.429 as
the news to extend the Bush tax cuts in the United States was
seen by investors as dollar-negative.
While the plan could accelerate U.S. growth, it is funded
through debt and expected to add significantly to the budget
deficit, thus would be another weight on the dollar.
"The likelihood that the Irish budget will pass and the
extension of U.S. tax cuts are working together to boost risk
appetite, which should last for the next few days but then
dissipate," said Mark McCormick, currency strategist at Brown
Brothers Harriman in New York.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Take a Look on euro zone debt crisis: []
Scenarios on euro zone crisis: []
Graphics package on Europe's struggle with debt:
http://r.reuters.com/hyb65p
PDF on yuan offshore market: http://r.reuters.com/byg28q
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EYES ON EUROPE, COMMODITIES
Euro zone policymakers have yet to show financial markets
that they can decisively resolve the region's debt problem.
Concerns remain that the debt crisis could spread from Greece
and Ireland to Portugal and possibly Spain.
After a five-hour meeting, the bloc's finance ministers
said late on Monday they would be taking no new steps to tackle
the contagion, saying an existing emergency fund was
sufficiently big and that a proposal to issue euro zone bonds
had not even been broached. []
German Chancellor Angela Merkel, speaking in Berlin,
rebuffed calls for a bigger financial safety net or joint euro
bonds.
Commodities, meanwhile, shed some gains after touching
multiyear or record highs as macroeconomic factors and a firmer
euro boosted prices.
Copper <CMCU3> rallied to a record high above $9,000 a
tonne before easing to $8,948 on rising demand expectations for
2011 against a backdrop of tight supply and a softer dollar.
U.S. light sweet crude oil <CLc1> fell 47 cents, or 0.53
percent, to $88.91 per barrel after rising above $90 a barrel
for the first time in 26 months.
Spot gold prices <XAU=> fell $10.90, or 0.77 percent, to
$1412.10 after touching a record high at $1,430.95 an ounce,
driven by fund buying ahead of year-end, the prospect of more
U.S. monetary easing and investor nervousness over the European
debt crisis.
U.S. government bond prices stumbled as the proposed
extension of tax cuts raised concerns over inflation and the
federal government's ability to meet its long-term debt
burden.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 41/32, with the yield at 3.0805 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 3/32, with the yield at
0.4682 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 56/32, with the yield at 4.3427 percent.
(Additional reporting by Julie Haviv, Richard Leong, Leah
Schnurr in New York and Harpreet Bhal, Michael Taylor, Jan
Harvey in London; Editing by Kenneth Barry)
