World stocks rally continues on euro debt moves

Stocks on Wall Street and in Europe rallied sharply on renewed hopes that steps have been taken to stem the euro-zone debt crisis.

But stocks fell back the final hour of trading on Wall Street after a report of a potential split over the terms of Greece's second bailout.

The Financial Times reported that as many as seven of the bloc's 17 members are arguing for private creditors to swallow a bigger writedown on their Greek bond holdings.

Earlier, stocks soared more than 3% and oil and gold prices rose after Greece's government vowed to meet budget goals and avoid default. In a meeting with German Chancellor Angela Merkel in Berlin, Greek Prime Minister George Papandreou said his government would deliver on all its austerity pledges. .

At the close (9am NZ time), the Dow Jones Industrial Average was up 146.83 points, or 1.3%, to 11,190.69 after earlier rising as much as 325 points.

The blue-chip index climbed 272 points in the previous session, the biggest point gain since September 7 and fourth-largest rally of the year. The index is up 4% since plunging 391 points last Thursday.

Hewlett-Packard was the biggest gaining blue chip, up 6.2%, while Walt Disney rose 4.2% and JP Morgan Chase advanced 1.9%, with the gains coming on top of Monday's 7% rise.

The S&P 500 index rose 1.1% to 1175.38, led higher by material, industrial and energy stocks, while the technology-oriented Nasdaq Composite shot up 1.2% to 2546.83.

Other markets: Europe, Asia up
European stocks surged as the prospect of a beefed-up euro-zone bailout facility underpinned sentiment.

French banks led the rally, including a 14% jump for BNP Paribas and a 17% gain for Société Générale. The two have been among those hit the hardest over worries about their exposure to heavily indebted European countries and their ability to raise funds.

The Stoxx Europe 600 index closed up 4.4% at 229.91. The UK's FTSE 100 index added 4% to 5294.05, France's CAC-40 index ended up 5.7% at 3023.38 and Germany's DAX advanced 5.3% to 5628.44.

Asian sharemarkets rebounded from Monday's drops to close at levels not seen for at least a year.

Japan’s Nikkei Stock Average jumped 2.8% to 8609.95, while the Korean Kospi surged 5%to 1735.71 and the Australian S&P/ASX 200 index climbed 3.6% to 4004.6.

Commodities: Oil, gold up
Oil futures jumped more than $3 a barrel on optimism that European leaders were finally making headway in addressing the sovereign-debt crisis.

Light, sweet crude for November delivery was up $US3.37, or 4.2%, at $US83.60 a barrel in New York. Brent crude on the ICE Futures Europe exchange was up $US2.17, or 2.1%, at $US106.11 a barrel.

Gold futures prices rebounded as some buyers took advantage of the recent selloff. The contract for September delivery was up $US58.10, or 3.7%, at $US1650.60 an ounce in New York.

Currencies: US dollar falls
The US dollar traded lower as global stock markets rallied.

The euro was at $US1.3616 compared with $US1.3532 late on Monday. The dollar was at ¥76.63 from ¥76.37, while the euro was at ¥104.34, compared with ¥103.33.

The UK pound was at $US1.5685 from $US1.5565, while the dollar bought 0.8958 Swiss franc from 0.9015 franc.