* Quake, tsunami rattle investors over impact on economy
* Japanese rebuilding expectations spurs rebound in stocks
* Yen rises on expectations of fund repatriation
* Long-dated U.S. bond prices fall on Japan fears
(Updates to include Japanese government bonds)
By Herbert Lash
NEW YORK, March 11 (Reuters) - Japan's massive earthquake
and devastating tsunami hit commodities prices on Friday, but
equity investors threw off their initial fears as they
reassessed damage to the world's third-largest economy.
Early in the session markets reeled as television images
revealed the destruction in Japan's north east after the
country's biggest earthquake on record left at least 1,000
dead. For details see [].
But some viewed the market's reaction as having gone too
far too fast, and that a rebuilding of Japan could be good for
a wide range of markets.
"It's generally a mistake for people to be too reactive to
a natural disaster like this," said Howard Ward, a fund manager
at the GAMCO Growth Fund.
Caterpillar Inc <CAT.N> and other heavy equipment makers
saw their stocks rise, and gold turned higher after the U.S.
dollar weakened against the euro. Copper prices steadied by the
close, recovering from an earlier three-month low.
The yen soared as the magnitude 8.9 quake spurred a safety
bid. The Japanese currency could rise further next week if
insurers scramble to raise cash by selling foreign assets, such
as U.S. government debt, a potential move bond investors also
were monitoring. [] Japanese government bonds
rose, benefiting from the initial rush out of equities.
The quake, the most powerful since Japan started keeping
records 140 years ago, sparked at least 80 fires in coastal
cities and towns, Kyodo said. Japanese nuclear power plants and
oil refineries were shut and one refinery was ablaze.
Thanos Bardas, a portfolio manager at Neuberger Berman in
Chicago, said the U.S. government bond market was totally
confused, caught like a deer in the headlights.
"The long-term response is counterintuitive," he said. "You
have this event risk that drives people into Treasuries, but on
the other hand you have things that need to be rebuilt so that
means maybe higher global growth and higher yields, globally."
U.S. crude <CLc1> dipped below $100 before paring some
losses. Japan is the world's third-largest energy consumer and
imports almost all its energy needs.
MSCI's all-country world index of global stocks
<.MIWD00000PUS> fell to a five-week low but then rose 0.2
percent in late trade.
Japanese equity futures fell 3.3 percent, but some
investors said shares may not suffer a deep slide because major
cities and manufacturing facilities were not damaged. []
Tsunami warnings were lifted for some densely populated
Asia Pacific countries previously thought to be at risk.
[]
The quake shut refineries and other industrial facilities
in Japan, driving oil lower. North Sea Brent was poised to post
a weekly loss for the first time in seven weeks, with U.S.
crude on track to end down for the first week in four.
The oil market also monitored a planned day of protests in
top oil exporter Saudi Arabia and the violence in Libya, where
oil exports have been disrupted.
"From an oil pricing perspective, the situation in Japan is
likely to result in a negative impact on crude oil prices and a
positive for refined products," said Dominick Chirichella,
senior partner at the Energy Management Institute in New York.
Brent crude futures for April delivery <LCOc1> settled down
$1.59 at $113.84 a barrel. U.S. crude futures for April
delivery <CLc1> fell $1.54 to settle at $101.16 a barrel.
European shares fell to a 2011 closing low, with insurers
among the hardest hit, but U.S. stocks rose, led by a 1.6
percent gain in the S&P energy index <.GSPE> and refining
shares. Valero Energy Corp <VLO.N> was up 6.3 percent and
Tesoro Corp <TSO.N> up 8.5 percent.
Wall Street was helped by a 1.0 percent rise in U.S. retail
sales in February, the largest gain in four months, as shoppers
stepped up purchases of autos, clothes and other goods even as
they spent more for gasoline. []
News that U.S. consumer sentiment fell to its lowest level
in five months in early March as gas prices rose later took
some of the glow off the retail sales report. []
The Dow Jones industrial average <> closed up 59.79
points, or 0.50 percent, at 12,044.40. The Standard & Poor's
500 Index <.SPX> rose 9.17 points, or 0.71 percent, at
1,304.28. The Nasdaq Composite Index <> added 14.59
points, or 0.54 percent, at 2,715.61.
The dollar fell 1.2 percent to 81.87 yen <JPY=EBS>, its
biggest one-day decline since Dec. 3, while the yen also
rallied against the euro, pound and Swiss franc.
Ten-year Japanese government bond futures <JGBv1> edged up
0.07 point to 139.27 in after-hours trade after having surged
0.66 point <2JGBv1> during the regular session, while the
10-year yield <JP10YTN=JBTC> fell 3 basis points to 1.270
percent.
Gold pushed higher, underpinned by the Japan quake and
Mideast turmoil.
U.S. Treasury debt prices dropped on fears that Japanese
insurers may need to sell bonds to pay for damages.
[]
The benchmark 10-year U.S. Treasury note <US10YT=RR> shed
10/32 in price to yield 3.40 percent.
(Reporting by Rodrigo Campos, Robert Gibbons, Karen Brettell,
Emily Flitter, Steven C. Johnson, Nick Olivari and Carole
Vaporean in New York; Writing by Herbert Lash)
