* Euro hits 2-month high against dollar
* GE results, Spain's plan to save banks boost stocks
* World stocks on track for largest weekly loss in 8 weeks
(Updates with U.S. markets, changes byline, dateline from
LONDON)
By Walter Brandimarte
NEW YORK, Jan 21 (Reuters) - World stocks rallied on Friday
as robust GE earnings foreshadowed a stronger U.S. economy,
while the euro jumped above $1.35 on hopes the euro zone will
find a durable solution for its debt crisis.
Spain's plan to partially take over its weakest saving
banks boosted shares of Europe's banking sector. Coupled with
expectations of a strengthened euro zone rescue fund, the
Spanish plan also helped ease tensions over the European
crisis. For details, see []
"The cloud that has long hung over Spain has not been the
fiscal issue but the issue of the banks," said Societe
Generale's interest rate strategist James Nixon.
"Some clarity on what the final bill will be is good for
the sovereign," Nixon said, adding that Madrid's plan is also
"contributing to a markedly more positive environment for the
(euro zone) periphery."
The euro jumped above $1.35, a two-month high against the
dollar, boosted in part by a report showing German business
confidence rose to its highest level in 20 years in January.
[]
The European single currency <EUR=> was trading at $1.3578,
up 0.76 percent from Thursday's close.
The dollar was 0.73 percent weaker against a basket of
major currencies, according to the U.S. dollar index <.DXY>.
Against the Japanese yen, the dollar <JPY=> was down 0.47
percent at 82.59.
World stocks rallied after two sessions of losses as
General Electric Co <GE.N>, the largest U.S. conglomerate,
reported stronger-than-expected quarterly earnings and its
first rise in overall revenue since late 2008.
"There is still a lot of liquidity going into the market,
especially after pulling back for a day or two," said Doug
Roberts, chief market strategist for Channel Capital Research
in New Jersey.
GE shares jumped 5.3 percent on the New York Stock
Exchange, accounting for the largest portion of gains of the
Dow industrials.
Google Inc <GOOG.O> shares also rose 2 percent after the
company reported better-than-expected net revenue for its
fourth quarter.
The Dow Jones industrial average <> gained 54.60
points, or 0.46 percent, to 11,877.40, while the Standard &
Poor's 500 Index <.SPX> rose 6.13 points, or 0.48 percent, to
1,286.39. The Nasdaq Composite Index <> was up 6.44
points, or 0.24 percent, at 2,710.73.
In Europe, the FTSEurofirst 300 <> index of top
shares jumped 0.9 percent, after falling 2.4 percent in the
previous two sessions.
Major Spanish banks advanced, with Banco Santander <SAN.MC>
up 3.4 percent and BBVA <BBVA.MC> rising 3.1 percent.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> climbed 0.64 percent, but the benchmark
indicator was still on track to post its largest weekly loss in
eight weeks.
The increase in appetite for stocks weighed on prices of
the safe-havens of gold and U.S. Treasuries, which erased early
gains to trade nearly flat.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
2/32 in price, with the yield at 3.4454 percent. Spot gold
prices <XAU=> edged up 0.06 percent, to $1,346.20 an ounce.
U.S. crude oil <CLc1> fell 23 cents, or 0.26 percent, to
$89.36 per barrel.
(Additional reporting by Angela Moon, Gertrude
Chavez-Dreyfuss, Richard Leong, and Kirsten Donovan; Editing by
Kenneth Barry)
