IBM sends stocks soaring

Stocks on Wall Street have soared, pushed up by strong earnings from IBM and President Barack Obama's praise for a $US3.7 trillion deficit-reduction plan.

The Dow Jones Industrial Average surged 202.26 points, or 1.6%, to 12,587.42 at the close (8am NZ time). The blue-chip index traded as high as 214 points on Mr Obama's comments.

The president said the proposal, which would modify entitlement programmes such as Social Security and rework the tax code, represents a "very significant step" forward in deficit talks.

Investors were already optimistic following encouraging earnings and a hint of housing optimism as starts rose more than expected.

IBM shares rose 5.2% after reporting second-quarter results that exceeded forecasts. The technology company posted strength in its hardware, software and services businesses, prompting a boost to its full-year earnings outlook.

The tech bellwether's gains helped push the Nasdaq Composite up 2.1% to 2823.50. The S&P 500 index was up 1.6% to 1326.73.

Other markets: Europe rebounds, Asia drags
European stocks snapped a three-session losing streak as solid earnings from Novartis, a rebound by bank stocks and advances by technology companies helped the region's indexes recover some of Monday's steep declines.

The Stoxx Europe 600 index rose 0.8% to 264.28, a day after slumping 1.8%. In London, the FTSE 100 rose 0.65% to 5789.99, led by bank stocks.

British Sky Broadcasting rose 2.9% in London and News Corporation soared 5.8% in the US as investors took in testimony by executives James and Rupert Murdoch at a UK parliamentary committee on the New of the World phone-hacking scandal.

In Frankfurt, the DAX increased 1.2% to 7192.67, lifted by chip maker Infineon Technologies. In Paris, the CAC-40 increased 1.2% to 3694.95.

Asian markets were mostly lower as debt jitters in Europe and the US kept investors cautious while utilities and exporters dragged the Tokyo market lower.

Japan's Nikkei Stock Average slumped 0.9% to 9889.72, as traders returned after a three-day weekend.

China's Shanghai Composite dropped 0.7% to 2796.98, Australia's S&P/ASX 200 slipped 0.1% to 4468.1, Taiwan's Taiex shed 0.2% to 8524.57 and Korea's Kospi ended little changed at 2130.21.

Commodities: Oil rises on weaker dollar
A weaker US dollar helped oil prices advance, as the outlook for another bailout for Greece brightened.

The rally erased much of Monday's losses, as prices remain stuck in a narrow range without a clear resolution to debt concerns in Europe and the US.

Light, sweet crude for August delivery traded up $US1.83, or 1.9%, to $US97.76 a barrel in New York. September Brent crude on ICE Futures Europe rose 97USc, or 0.8%, to $US117.02 a barrel.

Gold futures slipped from their record high on Monday. Gold for August delivery declined $US1.30, or 0.1%, to settle at $US1601.10 an ounce in New York after trading as high as $US1610.70 earlier.

Currencies: Euro gains strength
A rise in risk sentiment fuelled gains for the euro and other growth-sensitive currencies.

Investors took on a more optimistic tone about a Greek financing deal being reached at Thursday's emergency summit of euro-zone leaders.

The euro advanced to $US1.4162 from $US1.4113 late on Monday. It also strengthened against the Swiss franc and the Japanese yen.

The US dollar was at ¥78.91 from ¥79.04, while the euro was at ¥111.72 compared with ¥111.57.

The UK pound was at $US1.6135 compared with $US1.6057, and the dollar bought 0.8170 Swiss franc from 0.8176 franc.