GLOBAL MARKETS-Shares, euro climb on stronger German data

Tue Dec 11, 2012 3:13pm GMT

* European shares rise after ZEW German confidence jump
    * Wall Street higher in early trading
    * Fed expected to announce new Treasury securities purchases
    * Oil prices tick up on Egypt, Syria tensions

    By Wanfeng Zhou
    NEW YORK, Dec 11 (Reuters) - U.S. stocks advanced and
European shares rallied to an 18-month high on Tuesday after
German investor sentiment rose sharply in December and on
expectations the Federal Reserve will keep pumping money into
the U.S. economy.
    The euro gained versus the dollar, as investors steered
clear of the U.S. currency ahead of the Fed's meeting on Tuesday
and Wednesday, while U.S. government bond prices fell.
    Morale among German analysts and investors improved sharply
in December, jumping to 6.9 against expectations of -12.0,
fanning hopes that Europe's largest economy will avoid recession
this winter. 
    "We've been getting a lot of the beginning of our day from
seeing what Europe has been doing and I think that's going to
hold true today," said Kim Forrest, senior equity research
analyst at Fort Pitt Capital Group in Pittsburgh.
    The lack of progress in negotiations about the U.S. "fiscal
cliff" has kept investors from making aggressive bets in recent
weeks, though most expect a deal will eventually be reached.
    While the pace of talks in Washington to avert impending
U.S. tax hikes and spending cuts quickened, senior politicians
on both sides cautioned that an agreement on all the outstanding
issues remained uncertain. 
    The Dow Jones industrial average gained 61.56 points,
or 0.47 percent, to 13,231.44. The Standard & Poor's 500 Index
 rose 7.13 points, or 0.50 percent, to 1,425.68. The
Nasdaq Composite Index added 23.71 points, or 0.79
percent, to 3,010.67.      
    The FTSEurofirst 300 index rose 0.3 percent to
1,138.14 points, having hit its strongest since June 2011. The
MSCI global stock index edged up 0.5 percent to
336.51 points.
    The U.S. central bank is expected to announce a new round of
Treasury securities purchases at the end of its meeting on
Wednesday, according to a Reuters poll. The program would
replace its "Operation Twist" stimulus, which expires at the end
of the year. 
    Many economists believe the Fed will announce monthly bond
purchases of $45 billion, although some think it could be more.
    "We anticipate the Fed will announce Treasury purchases and
as that depresses yields it will have a negative impact on the
dollar and that supports the euro," said Jane Foley, senior
currency strategist at Rabobank.
    The euro rose 0.4 percent to $1.2989, while the
dollar was little changed at 82.34 yen.
    Markets had been rattled on Monday by Italian Prime Minister
Mario Monti's announcement he would step down some weeks early.
But the upbeat ZEW data helped lift shares and the euro from
their gloom.
 
    Expectations of more easing drove the dollar index 
down 0.3 percent, and pushed the Canadian dollar to a
two-month high, while the New Zealand dollar hit a nine-month
high of $0.8369.
    Benchmark 10-year Treasury notes were trading 9/32 lower in
price to yield 1.65 percent, the highest in over a
week and up from 1.63 percent late Monday. Investors were also
pushing for price concessions heading into $66 billion of U.S.
government debt auctions this week.
    In the oil market, Brent crude rose 52 cents to
$107.85 a barrel after OPEC said its production declined in
November, while a weaker dollar and Middle East unrest also
supported prices. 
    U.S. crude gained 19 cents to $85.75.
    Gold was steady near $1,710 an ounce, with more U.S.
stimulus expected to support gold's appeal as a hedge against
inflation.
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