Stocks, commodities surge as Wall Street recovers nerve

Stocks on Wall Street surged after a three-day break as concerns eased about European governments' debt loads and New York area manufacturing showed an improvement.

The Federal Reserve Bank of New York's Empire Manufacturing Survey’s business conditions index rose to 24.91 this month, from 15.92 in January. Economists had expected a reading of 16.0 in February.

No reports on new sovereign debt problems in Europe emerged over the long weekend, in addition to a lack of reports of further tightening in China, also helped boost sentiment toward stocks and commodities.

The Dow Jones Industrial Average closed 169.67 points, or 1.7%, higher at 10,268.81. Bank of America was the measure's best performer, up 2.7% after it reported "significant gains" in the number of modified mortgages it handles.

Chevron was up 2.2%, following a ratings upgrade from Bernstein Research. Merck gained 1.9% as its fourth-quarter profit and sales rose sharply on its recent takeover of Schering-Plough.

Kraft Foods was the only Dow component in the red. It fell 1.3% as its fourth-quarter revenue came in slightly short of analysts' expectations.

The S&P 500 index rose 1.8% to 1094.87 with all sectors in the black, led by energy and materials. The Nasdaq Composite climbed 1.4% to 2214.19.

Other markets

Rallies in commodity prices sent Canadian stocks higher. The S&P/TSX composite index rose 1.0%, adding 111.80 points to 11,581.61.

Yamana Gold rose 2.1%, while Barrick Gold advanced 1.1% and Iamgold gained 3.3%.

European shares rose broadly with UK banking group Barclays jumping sharply after reporting a profit that exceeded analyst forecasts.

Barclays rose 6.8%, boosting the banking sector. It said that its 2009 pretax profit rose 92%, slightly ahead of consensus analyst forecasts.

Other banks gaining included Societe Generale, up 4.5%, and Deutsche Bank up 3.7%.

The pan-European Dow Jones Stoxx 600 index closed 1% higher at 244.38, up for the second session in a row and for the sixth time in seven sessions.

The UK's FTSE 100 index rose 1.5% to end at 5244.06, the German DAX index finished up 1.5% at 5592.12 and the French CAC-40 index gained 1.7% to close at 3669.04.

Asian markets closed higher Tuesday, with banks driving Australian stocks up after an upbeat quarterly trading update from Westpac, while resource shares advanced in Tokyo on higher commodity prices.

Japan Petroleum Exploration climbed 2%, while commodities trading house Marubeni gained 1.6% and Sumitomo Metal Mining rose 1.8%. The Nikkei 225 finished 0.2% higher at 10,034.25,

In Australia, Westpac jumped 6.2% after a 33% jump in first-quarter cash earnings. Other banks followed, with ANZ gaining 2.9% and NAB climbing 3%. The S&P/ASX 200 gained 0.5% to 3744,.

South Korea's Kospi added 0.5% to 1601.05 and India's Sensex rose 1.2% to 16,226.68.

Commodities: Oil, gold up

Crude oil prices rose, spurred by a weaker dollar and renewed tension over Iran's nuclear ambitions.

Light sweet crude oil for March delivery in New York rose $US2.88 a barrel, or 3.0%, to $US77.0.

Gold futures also rallied, rising more than 2% as the dollar retreated.

April gold was up $US29.80, or 2.6%, at $US1119.80 an ounce in New York.

Currencies: Dollar down, euro up

The US dollar fell victim to improved market sentiment, declining against rivals as investors piled into stocks and commodities.

Higher-yielding, commodity-backed currencies, such as the Australian and New Zealand dollars, were the biggest beneficiaries of the improved sentiment, both increasing more than 1% against the US dollar in late morning New York trading.

Even the recently battered euro gained against the dollar as euro-zone finance ministers tried to reassure markets Greece's fiscal concerns would be kept under control.

The euro was at $US1.3708 from $US1.3601 late on Monday. The dollar was at ¥90.28 from ¥89.98, while the euro was at ¥123.75 from ¥122.36.

The UK pound was at $US1.5684 from $US1.5661.