(Updates with U.S. markets, changes byline, dateline; previous
LONDON)
By Jennifer Ablan
NEW YORK, Feb 6 (Reuters) - U.S. and European stocks rose
on Wednesday, reversing a day of severe declines triggered by
deepening fears of a recession in the United States that ended
with Asian markets plunging.
The rise in equities reduced the safe-haven appeal of U.S.
government debt, although bond yields are still hovering at
four-year lows, with the two-year Treasury note dropping 5/32
for a yield of 1.9955 percent from 1.92 percent late on
Tuesday.
The dollar also moved downward, edging lower against the
yen and the euro with investors reluctant to place big bets on
currencies ahead of a key interest-rate decision from the
European Central Bank on Thursday.
The climb in U.S. and European stocks on Wednesday came a
day after steep losses brought on by a services-sector report
that signaled a potential recession in the United States.
In recent weeks, concerns have intensified about the depth
of the U.S. housing and credit crisis, as data on the consumer
and labor front have revealed renewed weakness.
Japan's Nikkei .N225> lost about 5 percent in trading. It
was the Tokyo market's first opportunity to react to Tuesday's
huge drop in the U.S. Institute for Supply Management's index
of non-manufacturing industry, which hit levels not seen since
the 2001 U.S. recession.
"The market is being hit by U.S. recession fears," said
Yoshihiro Ito at Okasan Capital Management in Tokyo. "The
impact of subprime (mortgage) problems is spreading into the
broader U.S. economy."
Europe's FTSEuropfirst 300 index .FTEU3> settled up 0.58
percent on Thursday, after plunging 3.09 percent the previous
day.
U.S. stocks steadily climbed, thanks to some positive
earnings news. The Dow Jones industrial average .DJI> was up
94.05 points, or 0.77 percent, at 12,359.18 in early afternoon
trading.
The Standard & Poor's 500 Index .SPX> was up 12.00 points,
or 0.90 percent, at 1,348.64. The Nasdaq Composite Index .IXIC>
was up 23.38 points, or 1.01 percent, at 2,332.95.
Dow industrials component Walt Disney Co. posted a 27
percent drop in net income but it beat expectations and went
against the gloomy outlook trend with robust ad sales and
strong performance by its theme parks. Disney was up more than
6 percent, leading the Dow.
BONDS HAVING A BAD DAY
U.S. Treasury debt prices were lower. The benchmark 10-year
U.S. Treasury note US10YT=RR was down 18/32, with the yield at
3.6293 percent. The 2-year U.S. Treasury note US2YT=RR was down
5/32, with the yield at 1.9955 percent.
On the longer end of the Treasury curve, the 30-year U.S.
Treasury bond US30YT=RR was down 28/32, with the yield at
4.3717 percent. Bond yields move inversely to prices.
On the foreign exchange market, the dollar was down against
a basket of major trading-partner currencies, with the U.S.
Dollar Index .DXY> down 0.03 percent at 76.09 from a previous
session close of 76.116.
The euro EUR=> was up 0.05 percent at $1.4645 from a
previous session close of $1.4637. Against the yen, the dollar
JPY=> was down 0.03 percent at 106.75 from a previous session
close of 106.78.
The European Central Bank is widely expected to keep
benchmark euro zone interest rates at 4 percent, leaving the
focus on the post-decision news conference by bank President
Jean-Claude Trichet.
Futures markets expect the ECB to cut rates by a half
percentage point by the third quarter FEIU8> but are split on
chances of a further quarter-point easing by year-end.
In energy and commodities prices, U.S. light sweet crude
oil CLc1> fell 91 cents, or 1.03 percent, to $87.50 per
barrel, and spot gold prices XAU=> rose $18.75, or 2.11
percent, to $905.60. The Reuters/Jefferies CRB Index .CRB> was
up 2.75 points, or 0.76 percent, at 366.54.
(Additional reporting by Mike Dolan in London and Vivianne Rodrigues and Burton Frierson in New York)
