* Stocks surge, led by financials, on Europe banking news
* Oil prices fall, weighed down by dismal economic data
* Bonds rise after weak manufacturing, confidence data
(Recasts with U.S. markets, changes dateline, previous
LONDON)
By Herbert Lash
NEW YORK, March 31 (Reuters) - Oil prices and government
bond yields fell on Tuesday as U.S. reports on plunging home
prices and glum consumer confidence added to other signs of an
ailing world economy, but stocks rose on hope of economic
recovery.
Stock investors took heart from news that Barclays <BARC.L>
declined to take part in a British government asset protection
program while Belgium's Fortis <FOR.BR> outlined its future as
a viable insurance group following a hefty loss in 2008.
Copper rose as much as 4 percent, on course for its largest
quarterly gain since 2006, as rallying equities and Chinese
stockpiling soothed concerns about the economy and demand.
"People are in a more positive state of mind on the
prospects of economic recovery at the end of the year," said
John Meyer, head of resources at Fairfax in London.
MSCI's all country world equity index <.MIWD00000PUS> rose
1.5 percent and was on course to post its biggest monthly rise,
at about 7.8 percent, in almost 10 years.
U.S. stocks rose despite gloomy economic data, with March
on track for the market's best month in six years. Technology
shares rose as Google <GOOG.O> gained 1.9 percent to $349.03
after the company and Walt Disney <DIS.N> said they reached a
pact to offer ad-supported channels on YouTube.
Shares of Disney added 2.3 percent to $18.26. For details
see ID:nN30366003.
"I think it was the tone overseas and Barclays in
particular that gave people a good place to start today," said
John Forelli, portfolio manager at Independence Investments LLC
in Boston.
"The more people don't have to worry about ... counterparty
risk the easier funds will flow in transactions," he said.
At 1:30 p.m., the Dow Jones industrial average <> was
up 140.98 points, or 1.87 percent, at 7,663.00. The Standard &
Poor's 500 Index <.SPX> was up 15.25 points, or 1.94 percent,
at 802.78, and the Nasdaq Composite Index <> was up 36.99
points, or 2.46 percent, at 1,538.79.
In London, the FTSE 100 <> index of leading British
shares rose 4.3 percent but ended the quarter down almost 11.5
percent, its worst first quarter since it was created in 1984.
The pan-European FTSEurofirst 300 <> index of top
regional shares rose 3.5 percent to close at 733.69 points.
Miners performed well on rising copper <MCU3=LX> prices.
Anglo American <AAL.L> gained 9.7 percent, Xstrata <XTA.L> rose
9.8 percent and BHP Billiton <BLT.L> added 6.2 percent.
But the rally in world equities belied various reports that
showed no signs of a bottom for a deep slide in world demand.
The scale of the global downturn was underlined by the
Organization for Economic Cooperation and Development, which
said the economies of its 30 members would shrink by 4.3
percent in 2009, shedding 25 million jobs this year and next.
In the United States, a depressed housing sector, coupled
with dire employment prospects, kept consumer sentiment close
to rock bottom. The World Bank announced a $50 billion program
to counter a decline in global trade.
Euro zone government bonds rose and the 10-year cash Bund
yield flirted with sub-3 percent levels after data showed
inflation in the currency bloc hitting a record low.
Rising U.S. stocks tempered the bid for safe-haven U.S.
government debt.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
steady in price, slipping from earlier gains, to yield at 2.71
percent. The 2-year U.S. Treasury note <US2YT=RR> rose 1/32 to
yield 0.8355 percent.
Oil slipped, with U.S. light sweet crude oil <CLc1> off 35
cents, or 0.72 percent, at $48.06 a barrel.
Oil prices also fell before the release of U.S. inventory
data expected to show an increase in crude stockpiles that have
already swelled to their highest since 1993. []
"Nothing has changed in the near-term fundamentals. We
still have a deep recession, sharply contracting demand and
high stocks," said Mike Wittner, an oil analyst at Societe
Generale.
The dollar rose more than 2 percent against the yen to
trade at session highs as stock gains accelerated on Wall
Street.
The end of Japan's fiscal year and weak economic data
spurred investors to deploy funds abroad while the stocks rally
lifted the euro against the dollar.
The euro <EUR=> gained 0.33 percent at $1.3249 and the
dollar was down against a basket of major currencies, with the
U.S. Dollar Index <.DXY> off 0.19 percent at 85.579.
Against the Japanese yen, the dollar <JPY=> was up 1.97
percent at 99.31.
Oil fell toward $48 a barrel after data showed prices of
U.S. houses plunged at a record pace in January, indicating the
depth of the recession in the world's top energy consumer.
U.S. consumer confidence rose slightly in March but held
near record lows as the economy remained weak and job prospects
grew increasingly uncertain.
Overnight in Asia, Japan's Nikkei average <> fell 1.5
percent and the MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.6 percent.
(Reporting by Leah Schnurr, Steven C. Johnson, Ellen Freilich
in New York and Emelia Sithole-Matarise, Paul Lauener, Brian
Gorman, Jon Hopkins and Pratima Desai in London; writing by
Herbert Lash; Editing by Dan Grebler)
