Euro Rallies on Greece Aid Agreement

Euro Rallies on Greece Aid Agreement; U.S. Stocks, Metals Climb

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By Michael P. Regan and Justin Carrigan

March 26 (Bloomberg) -- The euro rallied from a 10-month low against the dollar as European leaders promised aid for Greece, while U.S. stocks rose as analyst upgrades and higher- than-estimated consumer confidence lifted retailers and financial firms. Metals rose, while oil erased gains.

The European currency strengthened 0.9 percent against the dollar at 11 a.m. in New York. The Athens Stock Exchange’s ASE Index climbed as much as 4 percent, the most since Feb. 10. The Standard & Poor’s 500 Index advanced 0.6 percent, rebounding from two days of declines. The 10-year Treasury yield hovered around 3.89 percent, near the highest level since June, amid evidence of a U.S. economic recovery.

European leaders backed a proposal late yesterday for a mix of International Monetary Fund and bilateral loans for Greece, while saying the nation probably won’t need help to cut the region’s biggest budget deficit. The U.S. economy grew at a 5.6 percent annual rate last quarter, the government said, and the Reuters/University of Michigan final consumer sentiment gauge for March topped forecasts as the pace of job cuts slowed.

“The transition from an economy that’s been driven by monetary and fiscal stimulus back to more of a traditional, consumer and business-driven growth may provide some opportunities,” said Greg Woodard, portfolio strategist at Manning & Napier in Fairport, New York, which manages $28 billion. “But it’s probably to provide some more volatility as we move through 2010.”

Analyst Calls

In U.S. trading, Apple Inc., Progressive Corp., Sallie Mae and Urban Outfitters Inc. rallied at 1.9 percent as analysts either raised share-price estimates or their ratings on the companies. RadioShack Corp. jumped as much as 9.7 percent on a New York Post report that the company may put itself up for sale.

The euro gained against 15 of the 16 most-traded currencies tracked by Bloomberg, while the yield on the two-year Greek note tumbled 21 basis points to 4.45 percent. The Dollar Index snapped a three-day advance, declining 0.6 percent to 81.613.

“Investors see the agreement as a backstop, and it is helping sentiment towards the euro,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London, of the Greek accord reached in Brussels. “However, this is a rather uninspired recovery and it’s difficult to say that this is an unequivocal vote of confidence.”

The MSCI World Index of 23 developed nations’ stocks rose 0.4 percent.European stocks lagged, with the Stoxx Europe 600 Index losing 0.4 percent to trim a fourth straight weekly gain, on concern mounting government debt may derail the economic recovery even after the European Union agreed a Greek aid plan.

‘No Choice’ for Europe

Unipol Gruppo Finanziario SpA sank 7 percent in Milan after Italy’s third-largest insurer announced a share sale and posted a full-year loss. Veolia Environnement SA, the world’s largest water company, slipped 1 percent in Paris after JPMorgan Chase & Co. advised selling the stock.

“Europe has no choice but to solve the Greece situation,” said Bruce McCain, chief investment strategist at Cleveland- based Key Private Bank, which manages $25 billion. “If you have confidence solving the debt crisis, the euro will rise against the dollar. However, the buyers of stocks over there will be discouraged to buy because of the weakness of their economies.”

The MSCI Asia Pacific Index increased 0.9 percent, its biggest advance in more than a week. Japan’s Nikkei 225 Stock Average rose to the highest level since October 2008 and the Shanghai Composite Index rallied 1.3 percent.

Emerging Markets

China led the MSCI Emerging Markets Index 0.4 percent higher, its first gain in three days. Brazil’s Bovespa index rose 0.4 percent as commodity producers gained. Russia’s Micex Index climbed 0.5 percent after the central bank cut its main refinancing rate for the 12th time in less than a year, lowering it a quarter point to 8.25 percent.

Nickel for delivery in three months rose 3.4 percent to $23,600 a metric ton on the London Metal Exchange to lead industrial metals higher. Copper, zinc and tin also advanced. Gold for immediate delivery added 0.6 percent to $1,096.50 an ounce.

Crude oil retreated 0.6 percent to $80.06 a barrel in New York after climbing as much as 1.2 percent earlier.