Global stocks, euro rise on Europe debt hopes

Global equities and the euro gained on Wednesday as optimism over tentative steps to resolve Europe's debt crisis overcame still widespread fears that Greece will ultimately default on its debt.

Comments by Europe's top bureaucrat that plans for a common euro zone bond, seen by many as a key tool to ease the region's debt crisis, would soon be presented gave equity markets on both sides of the Atlantic and the euro an early boost.

Creation of such a bond would give the weaker countries in the euro zone access to cheaper funds, although Germany has consistently opposed such a move.

The pan-European FTSEurofirst 300 index of top shares closed up 1.4% at 913.22, while stocks on Wall Street gained more than 1% in afternoon trade.

"The focus today seems to be on whether or not Greece defaults and the market is anticipating that the can will again be kicked down the road, avoiding a default," said Clark Yingst, chief market analyst at Joseph Gunnar & Co in New York.

"Still, the market is fluctuating intraday on the uncertainty related to the issue," Yingst said.

Jose Manuel Barroso, president of the European Commission, acknowledged as much, saying Europe was facing its most serious challenge in a generation, but there was no simple solution.

The Dow Jones industrial average was up 136.72 points, or 1.23%, at 11,242.57. The Standard & Poor's 500 Index was up 13.87 points, or 1.18%, at 1,186.74. The Nasdaq Composite Index was up 33.80 points, or 1.33%, at 2,565.95.

The euro's tepid gains suggested a clear outcome to the European debt crisis was still not in hand. The currency rose 0.3% against the dollar to USD 1.3726 .

The path of least resistance is still lower until Europe pulls a rabbit from the hat and resolves the debt issue, said Troy Buckner, managing principle at hedge fund NuWave Investment Management in Parsippany, New Jersey.

While equities have posted modest gains in recent days, key commodity markets have failed to participate, he said.

"For the moment at least, our strategies are pointing to 'risk off' in both commodity and stock markets," Buckner said.

Copper prices slipped and gold fell as volatile prices hurt the precious metal's safe-haven appeal.

Benchmark copper on the London Metal Exchange closed down at USD 8,635 a tonne, down from USD 8,780 on Tuesday, while spot gold prices fell USD 10.20 USD 1,823.10 an ounce.

Brent crude rose as investors hoped Europe was closer to easing the region's debt crisis, while data showing an increase in US product inventories dragged down US futures.

Brent crude for October delivery rose 21 cents to USD 112.10 a barrel. US October crude fell USD 1.26 to $88.95.

The benchmark 10-year US Treasury note was unchanged in price to yield 1.99%.