World equities rise on Home Depot result, German confidence

Stocks on Wall Street and in Europe gained overnight after Home Depot, the world's biggest home-improvement chain, posted earnings that beat estimates and a survey showed German investor confidence rose.

The Dow Jones Industrial Average gained 0.9 per cent to 9217.94 and the Standard & Poor's 500 Index rose 1 per cent to 989.67. The Nasdaq Composite advanced 1.3 per cent to 1955.92.

Europe's Dow Jones Stoxx 600 Index gained 1.3 per cent to 227.23 and among regional benchmarks, the U.K.'s FTSE 100 climbed 0.9 per cent to 4685.78, Germany's DAX 30 gained 0.9 per cent to 5250.74 and France's CAC 40 rose 0.9 per cent to 3450.69.

Home Depot jumped 3.1 per cent to US$26.93 after posting better-than-expected second-quarter earnings as cost cutting helped make up for weak sales. The retailer raised its full-year forecast.

US retailer Target jumped 7.6 per cent to US$44.32 after second-quarter earnings fell less than expected, reflecting efforts to trim costs and inventory to make up for tepid sales.

Goldman Sachs Group rose 2.1 per cent to USD$160.48 after the lender was raised to 'buy' at Pali Capital. American Express gained 4.3 per cent to US$31.69, leading the Dow higher, after the credit card company was raised to 'outperform' at Keefe, Bruyette & Woods.

Mohamed El-Erian, chief executive of Pacific Investment Management, told Reuters Television that the recent rally in US stocks had pushed valuations up too quickly and run out of steam.

German investor confidence rose to the highest level in more than three years, stoking optimism for a revival in Europe's biggest economy. The ZEW institute's economic expectations index for Germany rose to 56.1 this month, the highest since April 2006, from 39.5 in July.

US housing starts fell 1 per cent in July to an annual rate of 581,000, according to the Commerce Department. Still, starts on single-family dwellings rose 1.7 per cent to an annual pace of 490,000 units, the highest since October.

Housing starts are still 37.7 per cent lower than in July 2008. Permits for new building declined 1.8 per cent, the department said.

Labor Department figures showed process received by US farms, factories and refineries fell 0.9 per cent in July and the producer price index fell 6.8 per cent from a year earlier, easing concerns that fiscal stimulus measures would stoke inflation in the world's biggest economy.

Core producer prices, which exclude food and energy costs, fell 0.1 per cent in July.

The euro rose against the dollar and the yen after German investor confidence gained.

The European currency rose to $1.4124 from $1.4046 and strengthened to 133.79 yen from 133.08. The yen weakened to 94.71 per dollar from 94.50.

US Treasuries as stocks revived. The yield on 10-year notes fell 5 basis points to 3.52 per cent and the yield on 30-year Treasuries declined 4 basis points to 4.36 per cent.

Crude oil rose as gains in stocks stoked optimism for fuel demand and the greenback's decline lifted the appeal of commodities as an alternative investment.

Crude for September delivery rose 3.6 per cent to US$69.13 a barrel on the New York Mercantile Exchange.

Gold for December delivery rose US$3.40 an ounce to $939.20 in New York.


-BUSINESSWIRE