Equities up on EU's plan to deal with debt crisis

Dow Jones: 11,518.85 (+102.55) Nasdaq: 2,604.73 (+21.70) S&P 500: 1,207.25 (+11.71)US STOCKS rose yesterday, briefly erasing the Dow Jones Industrial Average's 2011 loss, as European leaders provided a road map to tame the debt crisis and the Federal Reserve said it discussed further asset purchases.

Bank shares led the advance, with Citigroup gaining 5 per cent to $29.22.

But Alcoa fell 2.4 per cent to $10.05 and ranked as one of the biggest drags on the Dow, a day after reporting results.

While Alcoa’s results marked the start of the third-quarter earnings period, they often do not reflect what the quarter will look like, analysts said.

The Dow Jones industrial average was up 102.55 points, or 0.90 per cent, to end at 11,518.85.

The Standard & Poor’s 500 Index advanced 11.71 points, or 0.98 per cent, to finish at 1,207.25.

The Nasdaq Composite Index rose 21.70 points, or 0.84 per cent, to close at 2,604.73.

“The market is going to fly,” Chad Morganlander, a Florham Park, New Jersey-based money manager at Stifel Nicolaus, which oversees more than $115 billion in client assets, said.

“Sentiment is shifting as uncertainty dissipates. Policy makers have taken the right steps to scotch the fear trade, which will improve equity and credit markets. Get ready. This is going to be some rally,” he said.

The Dow has gained 8.1 per cent since reaching this year’s closing low on October 3rd amid optimism European leaders will tame the region’s debt crisis.

Before that, the gauge had slumped as much as 17 per cent from this year’s high in April amid concern that Europe’s crisis would slow down the economic recovery.

Global stocks rose as European Commission president Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes.

Mr Barroso urged a “co-ordinated approach” to deliver a “significantly higher capital ratio of highest quality capital” for banks, while offering government funds only as a last resort.

Slovak parties reached an agreement to approve Europe’s enhanced bailout fund, paving the way for a repeat vote in the coming days after the pact failed to win support on Tuesday. – (Bloomberg/Reuters)