GLOBAL MARKETS-Bargain-hunters pull up stocks, but fears remain

                                

                                
 * U.S. stocks open higher as bargain hunters emerge
                                
 * Euro off Tuesday's lows but still weak
                                
 * Investors still inclined to reduce risk exposure
                                
 By Manuela Badawy and Sujata Rao
                                
 NEW YORK/LONDON, May 26 (Reuters) - Bargain-hunting lifted
U.S. stocks at the open on Wednesday, but the euro fell against
the dollar for a third straight day as U.S. Treasury Secretary
Timothy Geithner urged European leaders to find a unified
approach to the region's deepening debt crisis.
                                
 The euro slid against the dollar but stayed above the 8-1/2
year lows hit on Tuesday. Oil prices rallied nearly 4 percent,
climbing back above $71 a barrel after a U.S. industry report
showed a steep drop in gasoline stockpiles. [ID:nSGE64P06D]
                                
 "There is still a deeply negative sentiment toward the euro
due to the debt situation in Europe, the issue with Spain over
the weekend and how investors are bracing for the possibility
that other banks in the region may follow suit and may need a
bailout," said Joe Manimbo, senior market analyst at Travelex
Global Business Payments in Washington.
                                
 Spain took over a small savings bank, CajaSur, over the
weekend, and analysts said the move highlighted weakness in the
European banking sector.
                                
 Since global equity markets peaked on April 15, $4.2
trillion in market value has been erased from the MSCI
all-country world stocks index. <.MIWD00000PUS>
                                
 The index of world stocks on Wednesday rose 2.1 percent,
and emerging stocks rose 2.7 percent, partially recovering
Tuesday's 4 percent decline -- their biggest one-day fall in
over a year.
                                
 The Dow Jones industrial average <.DJI> was up 83.66
points, or 0.83 percent, at 10,127.41. The Standard & Poor's
500 Index <.SPX> was up 11.04 points, or 1.03 percent, at
1,085.07. The Nasdaq Composite Index <.IXIC> was up 29.09
points, or 1.32 percent, at 2,240.04.
                                
 Banks and industrial stocks, among the worst-hit issues in
the pullback, rose in early trading, with Citigroup Inc <C.N>
climbing 4.5 percent and industrial conglomerate General
Electric Co <GE.N> up 3.2 percent. Citi was upgraded to
"outperform" by analysts at Oppenheimer, which said the stock
was a good value. For details, see [ID:nSGE64P0FU]
                                
 EURO-TALK
                                
 U.S. Treasury Secretary Timothy Geithner urged Europeans on
Wednesday to work for a globally consistent approach to
financial reform as the European Union said it might go it
alone with a plan to tax banks to pay for future rescues.
[ID:nSGE64P04M].
                                
European shares <.FTEU3> rebounded by 3.1 percent from
Tuesday's nine-month lows, but the euro <EUR=> remained under
pressure amid continuing signs of banks' reluctance to lend to
euro-zone counterparts exposed to south European sovereign
debt.
                                
 The euro <EUR=> dipped to $1.2222 against the dollar, down
1.21 percent on the day, according to Reuters data.
                                
 Geithner's stress on coordination of new regulation
appeared aimed chiefly at Germany, Europe's biggest economy,
which stunned markets and angered its European Union partners
by unilaterally banning some speculative financial trades last
week. [ID:nLDE64O1HJ]
                                
 The dollar extended gains against the euro on Wednesday
after U.S. durables goods orders rose more than expected in
April [ID:nN25139665].
                                
 Manufacturing is leading the economy's recovery from the
worst recession since the 1930s, but consumers are now stepping
up to the plate as the labor market improves.
                                
"We now have five quarters of increases, and that's a good
sign of transitioning from a recovery to sustainable growth,"
said John Canally, investment strategist and economist at LPL
Financial in Boston.
                                
 "It's too early to gauge the impact of the European crisis
... (we) probably have to wait until May or even July to see an
impact."
                                
 The rise in risk appetite hurt Treasuries, and the 30-year
bond <US30YT=RR> shed 36/32 in price, with its yield rising to
4.14 percent from 4.08 percent late on Tuesday. The benchmark
10-year note <US10YT=RR> was trading 25/32 lower in price to
yield 3.25 percent, up from 3.18 percent.
                                
 While investors watched stocks, Treasuries prices were also
undermined by traders looking for price concessions ahead of
the auction of $40 billion of five-year notes on Wednesday
afternoon.
                                
 "Risk trades seem to be in a better mood today," said
Andrew Brenner, managing director at Guggenheim Partners in New
York.
                                
 (Reporting by Gertrude Chavez-Dreyfuss, Chris Reese, Edward
Krudy, Kevin Plumberg and Glenn Somerville; writing by Manuela
Badawy; Editing by Padraic Cassidy)