* China interest rate cut boosts stocks
* Bernanke to testify before congressional committee
* Mining, energy companies get a lift
* Indexes up: S&P 1.1 pct, Dow 1 pct, Nasdaq 1 pct
By Edward Krudy
NEW YORK, June 7 (Reuters) - U.S. stocks jumped at the open
on Thursday after China's central bank cut bank lending and
deposit rates, fueling hopes of simultaneous action to aid a
flagging global economy.
The surprise move by China's central bank to cut benchmark
interest rates by 25 basis points to shore up slackening
economic growth comes a day after hopes of more stimulus by
central banks drove U.S. stock indexes up more than 2 percent in
a sharp turnaround from recent heavy losses.
The rate cut in the world's No. 2 economy had a sudden and
dramatic impact on U.S. companies linked to China's
commodity-hungry industrial complex. U.S. Steel Corp
jumped 4 percent, and miner Freeport-McMoRan Copper & Gold Inc
jumped 2 percent.
"The dominant story obviously is the announcement of the cut
in interest rates out of China. We are probably going to
continue yesterday's rally focused on materials, energy, the
areas in the U.S. I'd expect to benefit the most from a
strengthening Chinese economy," said Peter Jankovskis, co-chief
investment officer at Oakbrook Investments in Lisle, Illinois.
At 10 a.m. Federal Reserve Chairman Ben Bernanke will
testify before a congressional committee. Investors will parse
his words closely after his No. 2, Janet Yellen, said the Fed
was ready to support the economy.
The Dow Jones industrial average rose 131.16 points,
or 1.06 percent, at 12,545.95. The Standard & Poor's 500 Index
added 13.40 points, or 1.02 percent, at 1,328.53. The
Nasdaq Composite Index gained 26.23 points, or 0.92
percent, at 2,870.95.
U.S. stocks jumped more than 2 percent on Wednesday, giving
the S&P 500 its best day since December, as talk of a rescue of
Spain's troubled banks and hopes for more monetary stimulus
sparked a rebound from recent selling.
After the S&P 500's 6-percent fall in May, and with the
index below its 200-day moving average, the market was ripe for
a rebound, analysts said. The index has reversed sharply above
that closely watched level.
"We were also flirting with the low end of the trading
band," said Gordon Charlop, a managing director at Rosenblatt
Securities in New York. The S&P bounced up from the 1,290 level,
and "this is something that kind of dovetails with the technical
rally that we might have seen anyway," said Charlop.
European stocks jumped nearly 2 percent in morning trade,
adding to the previous session's sharp rally, following the
China rate cut and as investors bet policymakers in Europe could
soon unveil measures to prop up ailing Spanish banks.
Even though Spain has not yet requested assistance and is
resisting being placed under international supervision, Germany
and European Union officials are urgently exploring ways to
rescue the country's banking sector, sources said.
Shares in Navistar International Corp plunged 21.8
percent to $21.89 after it posted a second-quarter loss as a
warranty reserve to repair early 2010 and 2011 vehicles drove up
costs, and the truck maker cut its full-year earnings outlook.
Health insurer Molina Healthcare Inc recalled its
2012 earnings guidance, citing uncertainties regarding medical
costs in Texas, sending its shares down about 30 percent to