Johannesburg - South African stocks surged nearly 4% on Tuesday, booking their biggest one-day percentage rise in 16 months as beaten down shares were lifted by renewed optimism that Europe would deal with its debt crisis.
The blue chip Top 40 - (Tradeable)
[JSE:J200] index snapped a four-day losing streak, adding 1 032.26 points to 27 493.63, while the broader All Share
[JSE:J203] index was 3.5% stronger at 30 752.40.
Stocks on major world markets were headed for their largest daily gain in 16 months and oil and gold prices rallied too, as improving sentiment over the European debt crisis helped markets rebound from last week's selloff.
The dollar fell against the euro for a third straight day. US Treasuries prices also slipped, with 30-year bonds down by over two full points, as demand for safe havens ebbed.
"The market is beginning to get the feeling that finally European lawmakers are moving out of their paralysis," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"Commodity prices are up across the board. There's hopes a global recession can be avoided."
Stocks rose for a third straight day. In morning trade, Wall Street's Dow Jones industrial average was up 207.64 points, or 1.88%t, a 11 251.50. The Standard & Poor’s 500 Index was up 20.91 points, or 1.80%, at 1 183.86. The Nasdaq Composite Index was up 36.55 points, or 1.45%, at 2 553.24.
The MSCI all-country world stock index was up 3.2%, on track to its largest daily gain since May 2010. For the week thus far, the index is up 4.3%, after dropping more than 7.0% last week.
Broad reboundThe broad-based rebound follows expectations built over the weekend from meetings of the International Monetary Fund (IMF) in Washington which signalled European policymakers were acting to contain Greece's debt problems and resolve a crisis threatening to engulf the world economy.
Some officials have said plans are under way to boost the size of a regional bailout fund to cut Greece's debts and recapitalise banks, although others have underlined these are at a very early stage. Germany has also said there are no plans to increase the size of the fund.
"Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.
"But there are still a lot of concerns. Investors remain sceptical."
US crude oil jumped almost 4% to above $83 per barrel. The spot price of gold, which tracks bullion, rose 1.7% to above $1650 an ounce. The broad-based Reuters/Jefferies CRB Index for commodities climbed 2.2%.