NEW YORK: US and European stocks rose yesterday on a resilient financial sector and robust US durable goods data that eased some concerns about the sagging US economy, although the dollar and bonds dipped.
Oil prices rose for a third day, boosted by concern that Tropical Storm Gustav will cut supply from US oil and gas installations in the Gulf of Mexico. Data showing an unexpected fall in US crude stocks also boosted oil demand.
The euro strengthened against the dollar and euro zone government bond prices fell after several European Central Bank officials played down the chance of an interest rate cut soon.
Investors bet the dollar’s recent jump to 2008 highs against major trading currencies went too far, too fast given the hawkish rhetoric from ECB officials.
ECB Executive Board member Axel Weber said any talk about lower rates in the euro zone is premature, and ECB Vice President Lucas Papademos went as far as saying further rate hikes could be needed to curb stubbornly high inflation.
The US durable goods report for July, which was mostly stronger-than-expected across the board, dealt US government debt a blow but lifted European stocks out of negative territory and provided an early morning boost to US stocks.
European shares rose on an oil-powered rally in British stocks and the robust US durable goods data.