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GLOBAL MARKETS-Optimism over Greece lifts euro, global stocks

Published 05/31/2011, 10:27 AM
Updated 05/31/2011, 10:32 AM
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* Euro climbs on expectations for a new Greek bailout

* Oil rises more than $2 a barrel on a weaker dollar

* Bonds slip as expectations on Greece trim safety bid (Adds opening of U.S. markets, changes byline, dateline, previous LONDON)

By Herbert Lash

NEW YORK, May 31 (Reuters) - The euro climbed to a three-week high against the dollar, global stocks advanced and crude oil rose on Tuesday on expectations that a second financial aid package would be approved for Greece.

European officials met in Vienna to sketch out options for a second bailout package for Greece, with private sector participation still under discussion to help relieve the country of its heavy debt burden. For details see: [ID:nL3E7GV07I]

Some gains in assets perceived as risky were cut after a report showed U.S. consumer confidence slid in May as consumers turned more pessimistic on the outlook for the labor market and inflation worries rose.

The Conference Board, an industry group, said its index of consumer attitudes fell to 60.8 from a revised 66.0 in April. The reading was below economists' forecasts for 66.5. [ID:nN9E7G401Y]

Traders shrugged off an earlier report that showed U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand. [ID:nN31287627]

U.S. stocks jumped about 1 percent at the open, following a similar rise in Europe and stronger gains in emerging market equity assets.

The euro rose as high as $1.4425 to the dollar, according to electronic trading platform EBS, while oil jumped more than $2 a barrel, with Brent crude rising above $116 as the U.S. dollar weakened on optimism over a Greek bailout.

The dollar <.DXY> was down 0.57 percent against a basket of currencies, and the euro was up 0.90 percent against the greenback.

"There's quite a big risk premium in euro based on Greek default concerns. So if Germany lends more money to get them through to 2013, the chances of a disorderly restructuring further down the line become much reduced," said Adrian Schmidt, currency analyst at Lloyds Banking Group.

Other assets seen as risky also gained. Copper rose to a four-week high, supported by a firmer euro, and the Reuters/Jefferies CRB Index <.CRB> of 19 commodities was up 1.1 percent.

On Wall Street, the Dow Jones industrial average <.DJI> was up 119.32 points, or 0.96 percent, at 12,560.90. The Standard & Poor's 500 Index <.SPX> was up 11.16 points, or 0.84 percent, at 1,342.26. The Nasdaq Composite Index <.IXIC> was up 25.91 points, or 0.93 percent, at 2,822.77.

MSCI's all-country world stock index <.MIWD00000PUS> rose 1.2 percent, while its emerging market index <.MSCIEF> gained 1.6 percent.

Assets seen as havens in times of uncertainty or perceived turmoil fell. The benchmark 10-year U.S. Treasury note was down 3/32 in price to yield 3.08 percent. Spot gold prices fell $1.26 to $1,536.60 an ounce.

U.S. light sweet crude oil rose $2.32, or 2.31 percent, to $102.91 a barrel.

(Editing by Kenneth Barry)

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