Stocks Rally, Europe Debt Worries Ease 09/08 12:31

   Stocks resumed their rally Wednesday as investors brushed off fresh worries 
about the health of European banks.

   NEW YORK (AP) -- Stocks resumed their rally Wednesday as investors brushed 
off fresh worries about the health of European banks.

   Strong demand at an auction for Portugal's debt early Wednesday helped 
relieve some concerns that resurfaced this week about the health of Europe's 
banking industry.

   The Dow Jones industrial average rose about 60 points in midday trading. 
Broader indexes also rose moderately.

   David Chalupnik, head of equities at First American Funds, said it was 
critical to see support for the Portuguese auction because it helped turned 
market sentiment "a little more positive." European markets reversed their 
losses after the results of the auction were announced.

   Financial stocks got a lift from the dwindling concerns about Europe's 
banks, including UBS AG, which fell sharply Tuesday. JPMorgan Chase & Co. was 
one of the biggest gainers among U.S.-based banks.

   Energy stocks benefited from BP PLC's credit rating being raised by Fitch. 
BP also released an internal report that largely deflected blame from the oil 
spill in the Gulf of Mexico to rig owner Transocean Ltd. and contractor 
Halliburton Co.

   Worries about how European government debt might drag down a global recovery 
halted a four-day winning streak Tuesday. Stocks rallied last week after 
reports on manufacturing and employment were better than expected.

   The two-day swing based on the ebb and flow of European debt fears fit into 
the pattern of stock movements over the past couple of months, said Mike 
McGervey, president of McGervey Wealth Management.

   "There seems to be a fixation on the latest news and data," McGervey said. 
Mixed economic data has helped keep stocks hemmed into a trading range 
recently, he added.

   A report due out Wednesday afternoon from the Federal Reserve could provide 
further insight into the pace of the domestic recovery. The Fed's "beige book" 
report will break down economic activity across the country by region.

   The Fed has been cautious in its statements about the economy in recent 
months. Any signs of encouragement from the central bank could be considered 
further confirmation of last week's economic reports and restart the rally.

   In midday trading, the Dow rose 59.79, or 0.6 percent, to 10,400.48. The 
Standard & Poor's 500 index rose 8.36, or 0.8 percent, to 1,100.20, while the 
Nasdaq composite index rose 21.87, or 1 percent, to 2,230.76.

   Britain's FTSE 100 rose 0.4 percent, Germany's DAX index gained 0.8 percent, 
and France's CAC-40 rose 0.9 percent.

   About seven stocks rose for every two that fell on the New York Stock 
Exchange, where volume came to a light 281.9 million shares. Volume remains 
thin, which means many traders are avoiding stocks altogether. Many investors 
are waiting to get a better sense of the pace of recovery and to see what might 
happen during November's elections.

   Rick Fier, an equities trader at Conifer Securities, said the elections more 
than the economy are likely to be the catalyst that moves the market higher in 
the coming months. Traders are assuming that the recovery will be slow and 
uneven, but growth will remain in place over the next few months, he said.

   Uncertainty about potential tax increases and the costs associated with 
health care and financial regulatory reform have helped to keep businesses from 
hiring, which in turn has slowed the recovery. The results of the elections 
should provide businesses and investors with a clearer sense of those issues.

   In corporate news, women's clothing retailer Talbots Inc. said its fiscal 
second quarter profit rose, but its outlook for the third quarter fell short of 
expectations. Shares dropped 61 cents, or 5.5 percent, to $10.50 on the 
cautious outlook.

   BP shares rose $1.18, or 3.2 percent, to $38.37. Halliburton rose 33 cents 
to $30.17.

   UBS climbed 19 cents to $17.71 a day after tumbling because of worries about 
the health of European banks. JPMorgan Chase rose 96 cents, or 2.5 percent, to 
$39.24.

   U.S. Treasury prices fell as investors moved back into riskier stocks. The 
yield on the 10-year Treasury note, which moves opposite its price, rose to 
2.66 percent from 2.60 percent late Tuesday. Its yield is often used to help 
set interest rates on mortgages and other consumer loans.


(KM)