Wall Street rebounds on euro bond move

Stocks fell then recovered on Wall Street after a choppy start amid continued turmoil over Europe's sovereign-debt crisis.

Attention turned from the shape of the new national unity government in Greece to Italy, where Prime Minister Silvio Berlusconi's government faces a key budget vote.

Italian 10-year government bond yields hit 14-year highs of around 6.67%. This raises the costs of servicing foreign debt of nearly $US2.5 trillion or five times the size of Greece’s $US500 billion.

On Wall Street, the early losses evaporated after reports that the eurozone's rescue plan may be designed to include external capital sources via an investment fund that would buy sovereign bonds in the primary and secondary markets.

The Dow Jones Industrial Average, which was down 100 points in early afternoon trade, recovered to be up 85.15 points, or 0.7%, to 12.068 at the close (10am NZ time). This put is back into positive territory for 2011.

The S&P 500 index was up 0.6% to 1261.12 while the Nasdaq Composite was up 0.3% at 2695.25.

Other markets: Europe, Asia down
European markets fell with the Stoxx 600 falling to 238.45. after being down as much as 1.8%.

France's CAC 40 slumped 3% to 3103.60 as French Prime Minister François Fillon outlined the country's second austerity package in under three months,

The German DAX 30 index dropped 0.6% to 5928.68 and the UK's FTSE 100 index dropped 0.3% to 5510.82.

Asian sharemarkets fell. Hong Kong's Hang Seng Index fell 0.8% to 19,677.89, while China's Shanghai Composite declined 0.7% to 2509.80.

Japan's Nikkei Stock Average shed 0.4% to 8767.09, Australia's S&P/ASX 200 index fell 0.2% to 4273.4 and Korea's Kospi finished down 0.5% at 1919.10.

Markets in Singapore, Malaysia, the Philippines and India were closed for holidays.

Commodities: Oil, gold up
Crude oil futures rose above $US95 a barrel for the first time since August 2 as a one-month bull run continues.

Light, sweet crude for December delivery was up 83USc, or 0.9%, at US$95.09 a barrel in New York. Brent crude was up $US1.75, or 1.6%, at $US113.72 a barrel.

Gold futures rose to a six-week high. The contract for November delivery settled up $US35, or 2%, at $US1790.30 an ounce in New York, its highest level since September 22.

Currencies: Euro eases
The euro eased only modestly even as yields soared on Italian government bonds.

The euro was at $US1.3745 compared with $1.3792 late Friday. The US dollar was at ¥78.06 compared with ¥78.23, while the euro was at ¥107.29 compared with ¥107.86.

The UK pound traded at $US1.6025 from $US1.6034, while the dollar bought 0.9004 Swiss franc from 0.8849 franc.