26 Jul 2008

US stocks rise on economic news

9:06 am on 26 July 2008

Stocks gained in jittery Wall Street trading on Friday as nagging worries about the credit crisis shaded optimism over stronger economic data.

The dollar rose against the yen after better-than-expected economic news and declining oil prices bolstered investor confidence early in the session.

But the news that Standard & Poor's may downgrade some of the credit ratings of mortgage finance companies Fannie Mae and Freddie Mac led to selling in recently buoyant financial shares.

The credit warning spread from the financials to derail a rally on Wall Street as it struggled to recover from gaping losses the prior session.

The Dow Jones industrial average rose 21.41 points, or 0.19%, at 11,370.69. The Standard & Poor's 500 Index rose 5.22 points, or 0.42%, at 1,257.76. The Nasdaq Composite Index added 30.42 points, or 1.33%, at 2,310.53.

Stocks initially rebounded strongly and government debt prices fell as a pullback in oil prices and the economy.

There were upbeat readings on US durable goods orders, new-home sales and a rebound in consumer sentiment from a 28-year low, which allayed some of the recent gloom over markets and the economy.


In Europe a profit warning by Munich Re knocked down insurers, helping push European shares slightly lower and overshadowing the US economic data that investors warmed to.

Shares of Munich Re, the world's second-biggest reinsurer, tumbled almost 13% before paring some losses to close off 7.3%.

On the upside, Danone surged 7.7% after the food and beverage group lifted its 2008 operating margin target and confirmed 2008 sales and profit growth outlook.

The FTSEurofirst 300 index of top European shares ended down 0.09% at 1,169.70 points, after falling more than 1% during the session.