Germany dampens eurozone summit hopes

Stocks on Wall Street recovered from early losses to finish higher as investors shrugged off German efforts to talk down expectations from this week's European summit.

An unnamed official said the German government was against combining the eurozone’s €440 billion interim bailout fund and the permanent €500 billion European Stability Mechanism, media reports say.

The news came after the Financial Times reported on Tuesday that officials were considering running the two funds alongside each other.

But the German official later reportedly said it had already been decided that the ESM would take over from the European Financial Stability Facility.

At the close (10am NZ time), the Dow Jones Industrial Average clawed back losses of 90 points to be up 46.24 points, or 0.4%, to 12,196.37. The S&P 500 index was up 0.2% at 1261.01, while the Nasdaq Composite was down marginally at 2649.21.

Financial stocks were among the strongest, after starting the day as the worst-performing sector.

Travelers advanced 1.4%, JP Morgan Chase rose 1% and Morgan Stanley climbed 1.3%. Pulling on the downside were energy and industrial stocks. Caterpillar fell 2.2%.

Other markets; Europe down, Asia up
European markets ended lower, with the Stoxx Europe 600 index losing 0.2% to close at 241.44.

Germany's DAX index ended 0.6% lower at 5952.64, the French CAC 40 slipped 0.1% to close at 3175.98 and the UK’s FTSE 100 fell 0.4% to settle at 5546.91.

In Asia, markets rose on optimism of progress in tackling eurozone debt.

Hong Kong's Hang Seng Index ended up 1.6% at 19,240.58, while the Shanghai Composite Index climbed 0.3% to 2332.73.

Japan's Nikkei Stock Average gained 1.7% to 8722.17, Korea's Kospi rose 0.9% to 1919.42, Australia's S&P/ASX 200 Index climbed 0.7% to 4292.50 and India's Sensex rose 0.4% to 16,877.06.

Commodities: Oil drops below $US100
Oil futures dipped below $US100 a barrel after a US inventory report showed that oil stockpiles unexpectedly swelled.

Light, sweet crude for January delivery fell as low as $US99.67 a barrel in New York but later recovered to be down $US1.25, or 1.2%, at $US100.03.

Brent crude on the ICE futures exchange was down $US1.02, or 0.9%, to $US109.79 a barrel.

Gold futures rose. The December delivery was up $US13, or 0.8%, to settle at $US1740.90 an ounce in New York.

Currencies: Euro drops on pessimism
The US dollar edged up against the euro as reports suggested Germany was rejecting the latest proposal to boost the eurozone's ability to bail out larger debtors.

The euro was at $US1.3394 from $US1.3401 late on Tuesday. The dollar was at ¥77.69, compared with ¥77.73, while the euro was at ¥104.06 from ¥104.13.

The UK pound traded at $US1.5692 compared with $US1.56, and the dollar bought 0.9243 Swiss franc from 0.9261 franc.