Global stocks rebound as default fears recede

Stocks on Wall Street rose and bank shares surged in Europe on hopes there will be some clarity regarding Greece and whether it's about to default on its debt.

German Chancellor Angela Merkel reportedly sought to downplay fears of an imminent default by Greece, saying Europe is doing all it can to “avoid disorderly processes.” Earlier, reports that China might purchase Italian debt had helped boost markets.

The Dow Jones Industrial Average was up 44.73 points, or 0.4%, to 11,105.85 at the close (8am NZ time). It had swung about 150 points from its session lows to highs.

Leading the blue chips higher were General Electric's 2.2% gain and Intel's 1.8% rise.

The S&P 500 index rose 0.9% to 1172.79. Industrial and material stocks were the biggest gainers. The technology-oriented Nasdaq Composite advanced 1.5% to 2532.15.

Other markets: Europe, Asia rebound
European markets ended higher as previously battered bank stocks posted a rebound. The Stoxx Europe 600 index rose 0.9% to settle at 220.97, having earlier lost as much as 1.5% to hit its lowest level since July 2009.

In France, Société Générale rose 15%, rallying after it said it had plenty of liquidity. The stock had tumbled about 11% on Monday, in part amid fears that it will be downgraded by Moody’s Investors Service.

Shares of BNP Paribas rose 7.2% after falling by as much as 12% earlier in the day. The CAC 40 index rose 1.4% to close at 2894.93.

The UK’s FTSE 100 index rose 0.9% to 5174.25, led by a 5.3% rise for Royal Bank of Scotland Group.

Germany’s DAX index rose 1.9% to 5166.36 as Deutsche Bank rallied 8.2% amid the strong gains across most of the banking sector.

Japanese and Australian stocks climbed, staging a mild rebound after the previous session's steep losses.

The Nikkei Stock Average gained 0.9% to 8616.55, paring its loss for the week to 1.4%, while Australia's S&P/ASX 200 index advanced 0.8% to 4072.7, cutting its loss for the week 2.9%.

In China, the Shanghai Composite Index fell 1.1% to 2471.30 as investors played catch-up after a three-day weekend.
Korea's Kospi remained closed for a second day for the Chuseok holiday, while Hong Kong was closed for the Mid-Autumn Festival.

Commodities: Oil, gold rise
Oil futures traded higher as traders focused on expectations for a drop in US crude inventories.

Light, sweet crude for October delivery rose $US1.07, or 1.2%, to $US89.26 a barrel in New York. Brent crude on the ICE Futures Europe exchange traded down 9USc, or 0.1%, to $US112.16 a barrel.

Gold prices rose as a sharply lower dollar and the metal's declines to two-week lows earlier this week drew some buyers back to the market.

The most actively traded gold futures contract, for December delivery, gained $US16.80, or 0.9%, to settle at $US1830.10 an ounce in New York.

Currencies: Euro falls back
The euro remained on the defensive. It traded at $US1.3665 compared with $US1.3679 late on Monday in New York, and at ¥105.18 from ¥104.10.

The US dollar was at ¥76.93 compared with ¥77.21, and the UK pound was at $US1.5789 from $US1.5862.