EU deal to refinance banks lifts Wall Street

Dow Jones: 11,869.04 (+162.42) Nasdaq: 2,650.67 (+12.25) S&P 500: 1,242 (+12.95)US STOCKS rose yesterday, as Europe reached agreement on plans to recapitalise banks and a report said China and other developing nations may be willing to invest in the region's bailout.

Financial stocks in the S&P 500 advanced 2.3 per cent, reversing an earlier decline.

“This European situation has been kicked down the road far enough,” said Peter Sorrentino, a fund manager at Huntington Asset Advisers in Cincinnati.

“There’s a general feeling that we’re coming close to perhaps not the final chapter in this, but the next chapter in terms of getting the banks recapitalised and keeping the system from locking up,” he said.

EU leaders said in a statement that they reached an agreement on a plan to recapitalise banks. The European leaders convened for the second summit in four days – and the 14th in 21 months – amid mounting global exasperation over their failure to extinguish the two-year-old crisis that now threatens to ravage Italy and France and brake the world economy.

French president Nicolas Sarkozy and German chancellor Angela Merkel want to meet Greek creditors in Brussels to break a deadlock of the terms of a debt writedown, said a person familiar with the matter.

Mr Sarkozy plans to call Chinese leader Hu Jintao today to discuss China contributing to a fund European leaders may set up to bolster its debt-crisis fight, said a person familiar with the matter.

Alcoa rose 2.6 per cent to $10.40. Caterpillar increased 2.2 per cent to $91.87. Bank of America climbed 2.6 per cent to $6.63.

Some 52 companies in the SP 500 are scheduled to report quarterly results.

Boeing gained 4.8 per cent to $66.76. The company topped profit estimates for the quarter when it delivered the first 787 Dreamliner and said the new model’s production costs will be spread over 1,100 planes.

Amazon.com tumbled 13 per cent to $197.61. The company is sacrificing profit margins in search of sales volume and market-share gains. The company will sell its Kindle Fire tablet for as low as $199, less than half the price of Apple’s cheapest iPad.

Ford Motor dropped 4.1 per cent to $11.93. – (Bloomberg)