Wall Street higher on upbeat economic figures

Dow Jones: 11,123.33 (+183.38) Nasdaq: 2,506.82 (+46.31) SP 500: 1,164.97 (+20.94):US STOCKS rallied for a third day yesterday, as commodities gained after European officials detailed plans to tame the sovereign debt crisis and reports on retail sales and jobless claims bolstered optimism in the economy.

The euro strengthened 0.7 per cent to $1.3442 after losing as much as 0.8 per cent.

American equities extended a global rally after European Central Bank president Jean-Claude Trichet said the ECB would resume covered-bond purchases and reintroduce year-long loans for banks, while defying calls for an interest-rate cut and acknowledging “downside risks” to the economy have intensified.

The European Commission is pushing for a co-ordinated capital injection for banks to shield them from the fallout of a potential Greek default.

“People have priced in a Lehman II type of situation,” Brian Barish, Denver-based president of Cambiar Investors, said. “You start to hear some credible stuff on European bank recapitalisation. They will do what they’ve got to do to prevent a Lehman from happening. There’s a good chance we might have a bottom in stocks.”

US stocks also climbed after claims for unemployment benefits rose less than forecast last week to a level that shows the pace of dismissals may be slowing. Applications for jobless benefits rose by 6,000 to 401,000, labour department figures showed. Economists projected 410,000 claims, according to a Bloomberg News survey.

Bank of America and Alcoa were among the top Dow gains. BNP Paribas, Credit Agricole and Natixis surged at least 5.3 per cent after Le Figaro said the French government was working on a contingency plan to take stakes in the country’s lenders.

BHP Billiton, a mining company, rallied 5.9 per cent as metal prices increased.

SABMiller surged 7 per cent after a report by Brazilian news website IG said the brewer is in talks to be bought by Anheuser-Busch InBev NV.

The dollar weakened against 14 of 16 major peers, with the Brazilian real surging 2.7 per cent to lead gains after higher than forecast inflation spurred bets the central bank may slow the pace of interest-rate cuts. Copper futures rose 4.5 per cent to $3.2465 a pound in New York. – (Bloomberg)