* U.S. would support extension of Europe stability facility
* Stocks bounce back on China, Europe, U.S. data
* Euro rebounds as investors eye ECB for debt moves
* Portugal sells all debt offered, pays record high yields
(Updates with European markets close)
By Walter Brandimarte
NEW YORK, Dec 1 (Reuters) - World stocks and the euro
jumped on Wednesday after Washington showed readiness to
further support debt-burdened euro-zone countries and
investors bet the European Central Bank could step up its
bond-buying program.
Better-than-anticipated economic data in China, Europe and
the United States also whetted investors' appetite for riskglobally, driving major U.S. and European stock indexes up
more than 2 percent.
Portuguese debt costs fell along with those of other
peripheral euro-zone countries as some investors bet the ECB
will take further action at its meeting on Thursday.
Portugal was also able to sell 500 million euros in
12-month T-bills but, in a sign of sagging investor confidence
in the country, yields paid on the debt rose to a euro
lifetime record of 5.281 percent, from 4.813 percent two weeks
ago.
The euro jumped 1.1 percent and traded above $1.31, also
boosted by news that the United States would be ready to
support the extension of the European Financial Stability
Facility via additional commitment of cash from the
International Monetary Fund. []
"The market's been caught short on euros. Periphery yield
spreads have tightened somewhat, and the market is pricing in
the possibility that the ECB won't be too aggressive
tomorrow," said Geoffrey Yu, currency strategist at UBS.
Some analysts warned, however, that the rebound of the
European single currency seemed to be just temporary.
"I think this is just caution ahead of the ECB meeting
tomorrow," said Vassili Serebriakov, senior currency
strategist at Wells Fargo in New York. "If anything, this is a
very tentative bounce until we hear from the ECB tomorrow."
Others said dramatic action after the ECB policy meeting
on Thursday was unlikely, but that the spreading euro-zone
debt crisis demanded radical measures at some point.
[]
ECONOMIC DATA BOOST
Appetite for risky assets also got a boost from
better-than-expected Chinese factory data in November, which
showed one of the world's largest economic engines was in good
health. []
In Europe, the euro zone's manufacturing sector expanded
at its fastest pace in four months in November, led by
heavyweights Germany and France. Britain's manufacturing hit a
16-year high.
U.S. private sector payrolls also registered their biggest
rise in three years in November, ADP Employer Services said,
lifting optimism about the job market ahead of Friday's key
government employment report. []
"We're going to focus more on China's data today and the
fact that the ADP report came in better than expected," said
Robert Pavlik, chief market strategist at Banyan Partners LLC
in New York.
The MSCI All-Country World Index <.MIWD00000PUS> climbed
2.1 percent after three consecutive sessions of losses.
The Dow Jones industrial average <> rose 244.42
points, or 2.22 percent, to 11,250.44, while the Standard &
Poor's 500 Index <.SPX> jumped 25.02 points, or 2.12 percent,
to 1,205.57. The Nasdaq Composite Index <> shot up 56.59
points, or 2.27 percent, to 2,554.82.
In Europe, the FTSEurofirst 300 <> rose 2.06
percent, its biggest one-day gain in three months, to finish
at 1,089.16. Shares of miners led the market higher after the
strong factory output data from top metals consumer China.
Emerging market stocks measured by a MSCI benchmark index
<.MSCIEF> jumped 2.2 percent.
The positive economic data also encouraged investors to
step out of the safe-haven dollar and Treasuries.
The U.S. dollar slid 0.66 percent against a basket of
major currencies, according to the U.S. Dollar Index <.DXY>.
The benchmark 10-year U.S. Treasury note <US10YT=RR> lost
more than 1 point in price, boosting its yield to 2.942
percent from 2.8 percent late Tuesday.
Commodities also posted gains, with U.S. crude oil prices
<CLc1> jumping 2.8 percent, or $2.32, to $86.43 per barrel.
The spot price of gold <XAU=> edged up 0.5 percent to
$1,391.40 an ounce.
(Reporting and writing by Walter Brandimarte; Additional
reporting by Rodrigo Campos and Gertrude Chavez-Dreyfuss;
Editing by Jan Paschal)
