* Euro gains nearly 5 pct against dollar since Jan. 7
* GE results, Spain's plan to save banks boost stocks
* World stocks on track for largest weekly loss in 8 weeks
(Updates with European markets' close)
By Walter Brandimarte
NEW YORK, Jan 21 (Reuters) - The euro rose for the fourth
straight session on Friday on hopes the euro zone will find a
durable solution for its debt crisis, while world stocks gained
as robust GE earnings foreshadowed a stronger U.S. economy.
European banking shares jumped on Spain's plan to partially
take over its weakest saving banks. Coupled with expectations
of a strengthened euro zone rescue fund, the bank rescue plan
in Spain 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, also boosted by a report showing German business
confidence rose to its highest level in 20 years in January.
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The European single currency <EUR=> was trading at $1.3575,
up 0.73 percent from Thursday's close. It has rallied nearly 5
percent since a low of $1.2916 reached on Jan. 7.
The dollar was 0.68 percent weaker against a basket of
major currencies, according to the U.S. dollar index <.DXY>.
Against the Japanese yen, the greenback <JPY=> was down 0.43
percent at 82.62.
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 5.6 percent on the New York Stock
Exchange, accounting for the largest portion of gains of the
Dow industrials.
But Google Inc <GOOG.O> pared early gains, rising 0.3
percent to $629.29. Investors focused on the stellar results of
the world's No.1 internet search engine rather than concerns
about a shake-up of top management. []
The Dow Jones industrial average <> rose 39.54 points,
or 0.33 percent, to 11,862.34, while the Standard & Poor's 500
Index <.SPX> gained 3.21 points, or 0.25 percent, to 1,283.47.
But the Nasdaq Composite Index <> was down 3.53 points, or
0.13 percent, at 2,700.76.
In Europe, the FTSEurofirst 300 <> index of top
shares closed 0.8 percent higher, after falling 2.4 percent in
the previous two sessions.
Major Spanish banks advanced, with Banco Santander <SAN.MC>
up 3.78 percent and BBVA <BBVA.MC> rising 3.36 percent.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> climbed 0.49 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 trimmed
early gains.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
7/32 in price, with the yield at 3.4258 percent. Spot gold
prices <XAU=> fell 0.13 percent, to $1,343.70 an ounce.
U.S. crude oil <CLc1> fell 37 cents, or 0.41 percent, to
$89.22 per barrel.
(Additional reporting by Angela Moon, Gertrude
Chavez-Dreyfuss, Richard Leong, and Kirsten Donovan; Editing by
Kenneth Barry)
