Global stocks rise on earnings, Euro falls on inflation data

By Richard Leong
The curve of the German share price index DAX board at the Frankfurt stock exchange
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The curve of the German share price index DAX board is pictured at the Frankfurt stock exchange April 29, 2014. REUTERS/Remote/Fabrizio Bensch

By Richard Leong

NEW YORK (Reuters) - By Richard Leong

NEW YORK, April 29 (Reuters) - World stock indexes rose on solid company earnings on Tuesday, while the euro slipped as weaker-than-expected German inflation data kept alive chances of more stimulus from the European Central Bank.

Worries about Ukraine moved to the back burner after the United States and the European Union imposed more sanctions on Russia for its role in backing the separatist movement in eastern Ukraine.

Relief that the West's broadened sanctions on Moscow were limited encouraged some investors to step back into stocks and other risky assets while paring holdings in the traditional safe havens of gold and U.S. and German government debt. (Full Story)

Yields on U.S. and German benchmarks US10YT=RR DE10YT=RR edged up to 2.69 percent and 1.50 percent, respectively. U.S. bond yields also were affected by the $12 billion in bond supply from iPhone maker Apple AAPL.O, which enticed huge orders, according to Thomson Reuters unit IFR. (Full Story)

Oil prices rebounded a day after posting their biggest fall in a month as traders focused on the violence in eastern Ukraine and a possible delay in U.S. relaxation of sanctions on Iran later this year.

Equities drew the most investor attention on Tuesday, with shares in Europe rising more than 1 percent and Wall Street indexes also rising, though less dramatically.

"The Ukraine situation played an important role here. The tension there has been diffused for now," said Robbert Van Batenburg, director of market strategy at Newedge USA LLC in New York. "You have some decent earnings in the U.S. and Europe as well."

Upbeat news from Finnish telecom giant Nokia NOK1V.HE and German chipmaker Infineon IFXGn.DE inspired European stock markets, while Wall Street benefited from encouraging results from U.S. drugmaker Merck MRK.N and mobile provider Sprint S.N. (Full Story) (Full Story)

News that Britain's economy grew at a solid 0.8 percent pace in the first quarter, for an annual growth rate of 3.1 percent, the fastest since 2007, also boosted sentiment. (Full Story)

In the United States, private data showed that home prices grew at a solid clip in February, though Americans' confidence in the economy dipped in April from a more than six-month high set in March. (Full Story) (Full Story)

The Dow Jones industrial average .DJI closed up 85.67 points, or 0.52 percent, to 16,534.41, the S&P 500 .SPX gained 8.8 points, or 0.47 percent, to 1,878.23, and the Nasdaq Composite .IXIC ended up 29.142 points, or 0.72 percent, to 4,103.543.

The FTSEurofirst 300 .FTEU3 index of top European shares closed 1.2 percent higher at 1,352.42. The STOXX Europe 600 Tech index .SX8P was up 1.4 percent, a top sectoral riser.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, rose 0.6 percent at 413.05 points.

Investors also looked for cues on whether European policy-makers will embark on more stimulus to avert deflation.

The ECB president, Mario Draghi, told German lawmakers on Monday that bond purchases as a tool to stem falling prices - similar to the stimulus measures conducted by the U.S. Federal Reserve -- remain some way off. (Full Story)

A report due on Wednesday is expected to show inflation in the euro zone picking up to 0.8 percent in April, though that would still be well below the ECB's medium-term target of just below 2 percent. An omen of a below-target reading came on Tuesday when Germany said its annual inflation rate was 1.1 percent in April but less than the 1.3 percent rise expected. (Full Story)

"Germany is Europe's biggest economy, and we will be watching what happens," said Eric Viloria, currency strategist at Wells Fargo Securities in New York. "If inflation comes in too low, that raises expectations the ECB will lower rates or take other steps that will hurt the currency."

Central bank purchases of bonds are designed to hold down long-term interest rates and bolster economic activity. They also erode a country's currency.

The euro was down 0.3 percent at $1.3811 EUR= and off 0.2 percent against the yen, at 141.64 yen EURJPY=.

The dollar index, a measure of the greenback's value against six major currencies, rose 0.15 percent at 79.802 .DXY. FRX/

As traders speculate on the ECB's next move, the Fed began a two-day policy meeting on Tuesday. It is expected to trim its monthly bond-buying stimulus further. (Full Story)

In commodity markets, Brent crude LCOc1 ended up 86 cents, or 0.80 percent, at $108.98 a barrel, and U.S. crude CLc1 settled up 44 cents, or 0.44 percent, at $101.28 per barrel. O/R

Spot gold prices XAU= erased earlier gains, dipping 49 cents, or 0.04 percent, to $1,295.11 an ounce. GOL/

(This story was corrected to delete reference to Nikkei. Tokyo market was closed for a holiday)

(Reporting by Richard Leong; Additional reporting by Michael Connor in New York; Jamie McGeever, Marius Zaharia and Tricia Wright in London; Editing by Dan Grebler, Meredith Mazzilli and Leslie Adler)

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(Reporting by Richard Leong; additional reporting by Jamie McGeever, Marius Zaharia and Tricia Wright; Editing by Alison Williams, Dan Grebler and Meredith Mazzilli)