GLOBAL MARKETS-Global stocks, euro gain on debt crisis optimism
* Global equity markets extend gains on debt crisis hopes
* Crude oil rises on optimism Europe to agree on solution
* Dollar slumps to record low against the yen, euro gains
* Bond prices slide on optimism about EU summit outcome
By Herbert Lash
NEW YORK, Oct 21 (Reuters) - Global equity markets rose and
the euro gained on Friday amid a growing sense among investors
that European leaders over the next few days will settle on a
way to resolve the euro zone's two-year-old debt crisis.
The optimistic mood in U.S. and European financial markets
lifted risky assets and crimped the safe-haven demand for
government debt on both sides of the Atlantic.
Still, senior European sources said Berlin and Paris were
still at loggerheads on two core elements of a plan to build a
firewall around Greece and stabilize bond markets: how to scale
up the euro zone's rescue fund, the European Financial
Stability Facility (EFSF), and how to reduce Greek debt.
Brent crude oil rose more than $1 per barrel to above $111
propelled by signs that emerged on Thursday that France and
Germany were moving forward on a comprehensive debt deal.
"There is renewed hope that European leaders will pull
something out of the bag and manage to come up with a solution
to the debt crisis," said Daniel Briesemann, commodity analyst
at Commerzbank in Frankfurt.
Equity markets gained on the optimism and were also buoyed
by strong earnings reports from U.S. corporate icons.
McDonald's Corp <MCD.N> reported higher-than-expected
quarterly profit,
Honeywell International Inc's <HON.N>
quarterly earnings increased 45 percent and the company lifted
its full-year outlook, while General Electric Co <GE.N> posted
an 18 percent profit rise that met Wall Street's expectations.
Major regional stock gauges in Europe and for the world
rose more than 2 percent while U.S. stock indices moved up by
almost the same.
MSCI's all-country world equity index <.MIWD00000PUS>
gained 2.0 percent and the FTSEurofirst 300 <.FTEU3> index of
top European shares rose 2.3 percent at 975.90 points.
On Wall Street, the Dow Jones industrial average <.DJI> was
up 201.66 points, or 1.75 percent, at 11,743.44. The Standard &
Poor's 500 Index <.SPX> was up 20.16 points, or 1.66 percent,
at 1,235.55. The Nasdaq Composite Index <.IXIC> was up 40.46
points, or 1.56 percent, at 2,639.08.
"It seems like any negative surprise from this weekend's
summit has been been diminished by news European leaders will
have a follow-up session on Wednesday," said Mike Cloherty,
head of U.S. rate strategy at RBC Capital Markets in New York.
"Overall, I don't think anyone is looking for a complete
solution that quickly."
The euro <EUR=> gained 0.7 percent to 1.3873 against the
dollar, which slumped to a record low against the yen after
breaking through stop loss and options barriers. It was the
dollar's biggest one-day decline in nearly two months.
One trader said Japanese banks then stepped in to buy
dollars against the yen at 76.00 yen.
The benchmark December Brent crude contract <LCOc1> rose
$1.25 to $111.01 per barrel.
U.S. light crude oil futures <CLc1> were up $2.03 at
$88.10.
U.S. government debt prices fell. German Bund futures
extended losses to hit session lows while U.S. benchmark
10-year notes <US10YT=RR> fell.
Bund futures <FGBLc1> fell as much as 77 ticks on the day,
while the benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 9/32 in price to yield 2.22 percent.
Gold <XAU=> rose about 1 percent to $1,635.24 an ounce on
the dollar's weakness.
