World stocks rise on talk of G20 action

Last Updated: Fri, Jun 15, 2012 16:01 hrs

By Herbert Lash

NEW YORK (Reuters) - World equity markets rose on Friday as investor fears of euro zone turmoil following the Greek election this weekend were partly offset by talk of a coordinated response by the world's major central banks to ease any market dislocation.

U.S. stocks shrugged off new batch of weak economic data and a survey of U.S. consumer sentiment that fell in early June to a six-month low because of the deteriorating jobs market and Europe's lingering debt crisis.

The euro rebounded but bond yields fell on a safe-haven bid driven by concerns of a slowing U.S. economy and nagging worries about potential euro zone contagion.

"Right now we are faced with the uncomfortable combination of extremely oversold markets and a number of signals telling us it is right to panic," said Robert Farago, head of asset allocation at Schroders Private Banking.

"This leaves us poised for a rapid rebound if anything is done to restore confidence but vulnerable to accelerating downside if authorities remain on the sidelines."

Central banks from Tokyo to London prepared for any turmoil from Greece's election on Sunday, with the European Central Bank hinting at an interest rate cut and Britain set to open its coffers.

Officials from the G20 told Reuters on Thursday that the top central banks stood ready to stabilize markets by providing liquidity if the election result causes financial upheaval.

G20 leaders meet in Mexico on Monday and Tuesday as the results of the Greek vote and market reactions emerge.

On Wall Street, the Dow Jones industrial average was up 67.58 points, or 0.53 percent, at 12,719.49. The Standard & Poor's 500 Index was up 8.06 points, or 0.61 percent, at 1,337.16. The Nasdaq Composite Index was up 19.32 points, or 0.68 percent, at 2,855.68.

In Europe, the FTSE Eurofirst 300 index of top European shares was up almost 1.0 percent, with European bank stocks climbing 1.6 percent.

MSCI's all-country world equity index rose 0.9 percent at 304.98 points, and emerging markets gained 1.1 percent.

German Bund futures extended gains, accelerating their rise after the release of the U.S. economic data. Bund futures rose to 142.33, up 50 ticks on the day.

Yields on the 10-year U.S. Treasury note fell at one point to 1.564 percent, the lowest in about 10 days. The note later traded to yield 1.5671 percent, with prices up 22/32.

The euro initially hit a session low of $1.2590 against the dollar and later rebounded, up 0.06 percent at $1.2633.

The U.S. dollar index fell 0.4 percent to 81.665.

Brent crude rose 62 cents to $97.79 a barrel. U.S. crude rose 29 cents to $84.20 a barrel.

(Reporting By Herbert Lash, editing by Dave Zimmerman)

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