Publications
Partners
New York - Evidence that China's high-flying economy may avoid a hard landing lifted stocks, the euro and other risky assets on Tuesday, while Greece managed to raise cash in a debt auction even after it became S&P's lowest-rated sovereign borrower.
Chinese data showing the world's second biggest economy chugging along amid efforts to prevent it from overheating renewed the market's appetite for risk, also boosting oil, gold and other commodity prices. However, it put downward pressure on low-risk government bonds.
China's inflation accelerated to its fastest level in almost three years, and its industrial output grew a solid 13% increase from a year ago. Its central bank later increased the reserve requirement ratio for commercial lenders by 50 basis points.
While the data showed inflation at multi-year highs, it did not stoke fears that it is running beyond the control of policy-makers.
"News out of China is somewhat encouraging in spite of the fact they raised reserve requirements," said Peter Cardillo, chief market economist at Avalon Partners in New York.
He said the data is a sign that perhaps China's economy "can avoid a hard landing, and that's cheering the markets."
The US stock market opened higher, with the Dow Jones industrial average adding 94.49 points, or 0.79%, to 12 047.46. The Standard & Poor's 500 Index gained 12.59 points, or 0.99%, to 1 284.42. The Nasdaq Composite Index rose 26.60 points, or 1.01%, to 2 666.29.
Top European stocks were up 1.0%, while Tokyo's Nikkei ended up 1.0%.
Also reducing investor anxiety was Greece's ability to raise short-term funds after Standard & Poor's downgraded its rating closer to default territory.
Greece sold €1.625bn ($2.33bn) of 6-month T-bills at a yield of 4.96%. This needed yield higher than May's 4.88% but attracted a larger percentage of foreign buyers than the previous auction, reflecting market expectations Greece will secure a second rescue package worth about €120bn to stave off default.
The cost of insuring Greek debt against default over five years rose, as did the yield on Greek government bonds, to a record high.
Greece's trials did little to discourage investors from buying the euro, which rose around 0.1% against the dollar to $1.4423 .
