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GLOBAL MARKETS-US stocks rise after recent lows; euro slips

Published 06/13/2011, 10:24 AM
Updated 06/13/2011, 10:28 AM
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* Wall Street opens higher on bargain-hunting

* Greek CDS at record high; euro at record low vs Swiss

* China data, U.S. growth concerns prompt risk unwinding

* U.S. oil prices fall, gold near 10-day lows (Updates to U.S. markets;, changes dateline, previous LONDON)

By Richard Leong

NEW YORK, June 13 (Reuters) - Wall Street stocks rose on Monday after cheaper prices after six-weeks of losses enticed bargain-hunting investors back into the market, even as the euro fell on nagging worries over Europe's attempts to solve the Greek debt crisis.

Weaker Chinese data fueled concerns about slowing global growth, briefly knocking non-U.S. shares to a 12-week low.

Reduced risk appetite led to an unwinding of positions in oil and precious metals.

"The market has been oversold over the last six weeks, so a short-term rebound on short-covering is not out of the question," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

The S&P 500 index <.SPX> and other benchmarks opened higher on Monday. The S&P 500 sagged nearly 7 percent on the back of a barrage of soft economic data after closing on April 29 at its highest closing level in nearly three years. [US/]

The gains in U.S. and European stocks <.FTEU3> helped the MSCI world equity index <.MIWD00000PUS> to rise 0.2 percent after hitting its weakest since mid-March.

The world stock benchmark has lost nearly 8 percent since hitting a three-year peak in late April and is very close to erasing all of its 2011 gains.

In Asia, Chinese stocks ended at a 4-1/2 month low, hit by worries about the impact of monetary policy tightening in an economy which is a key driver of world growth.

China's money growth slowed to a 30-month low in May and banks extended fewer new loans than expected, while exports to the United States and EU hit their weakest since late 2009.

An increasingly gloomy economic backdrop and Greece's fiscal predicament have stacked the odds against risk-taking.

Investors are concerned by signs policymakers are struggling to reach an agreement on a second bailout for Athens and that any steps taken to involve private investors will wind up triggering a technical debt default.

The cost of insuring Greek sovereign debt against default rose to an all-time high, while the euro hit a record low against the safe-haven Swiss franc.

Uncertainty over future U.S. monetary policy after the Federal Reserve's $600-billion bond purchase program ends this month also added to investor aversion to taking on riskier assets, especially going into the thinly-traded summer months.

"Equities look like a buy at these sorts of levels on a one to two year view, but I would not read too much into it," said David Coombs, fund manager at Rathbone Brothers, which has 15.2 billion pounds under management.

GREEK DEAL

European leaders are due to complete a new rescue package for Greece at a Brussels summit on June 23-24, but deep divisions remain about how to get the private sector involved, while the deal would not help reduce Greece's massive 340 billion euro debt load.

Five-year credit default swaps on Greek sovereign debt rose 58 basis points on the day to a record high of 1,600 bps, according to data monitor Markit.

"What the euro needs is a resolution to the Greek crisis and the politicians and the central bankers do not appear to be close to finding one," said Kit Juckes, currency strategist at Societe Generale in London. "That uncertainty is weighing on the euro."

The euro fell against the Swiss franc, but gained versus the U.S. dollar on expectations that euro zone interest rates would remain higher than those in the United States.

The euro touched a record low of 1.2004 Swiss francs on the EBS trading platform . The Swiss franc is seen as a global barometer for risk aversion.

The euro was up around 0.2 percent at $1.4375 after central bank buying erased earlier losses.

In the oil market, U.S. crude oil fell 0.76 percent to $98.53 a barrel on a report of more supply from Saudi Arabia. The world's biggest oil exporter will raise output to 10 million barrels per day in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone in pumping more outside official OPEC policy.

In gold trading, bullion prices fell to its lowest in about 10 days as the euro eased against the dollar. Spot gold was down 0.3 percent at $1,527.11 an ounce, above a session low of $1,523.44. (Additional reporting by Rodrigo Campos in New York; Anirban Nag, Neal Armstrong, Sue Thomas, Ikuko Kurahone, Natsuko Waki in London)

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