Equities up on M&A; dollar strength a concern

By Ryan Vlastelica

NEW YORK (Reuters) – Stock markets around the world rose on Tuesday as investors moved into riskier assets for a second straight day, though a rise in the U.S. dollar could a headwind for further gains.

Potential deal activity boosted equities on Wall Street and in Europe, a positive that added to the growing conviction that the U.S. Federal Reserve would not raise interest rates until after the summer. Crude oil rallied and was having its biggest weekly gain since February 2011.

Recent stocks gains have been tied to last week’s U.S. payrolls report, which was much weaker than expected. While the data, along with other recent indicators, pointed to slowing U.S. growth, market participants viewed it as a positive by suggesting the Fed would delay boosting rates.

The U.S. dollar has rallied since mid-2014 on expectations for a rise in rates. While a delay would be a negative for the greenback, investors took advantage of recent weakness in the currency, bidding the U.S. dollar solidly higher.

On the takeover front, FedEx Corp offered to buy Dutch package-delivery company TNT Express for $ 4.8 billion, the latest in a series of multi-billion-dollar deals.

“This is a good sign for markets, indicating that companies see value, especially in the long term, but (equity) moves could be tepid if we continue to see this kind of trend in the dollar,” said Matt Lloyd, chief investment strategist at Advisors Asset Management in Monument, Colorado.

At midday, the Dow Jones industrial average <.DJI> was up 91.26 points, or 0.51 percent, at 17,972.11. The Standard & Poor’s 500 Index <.SPX> was up 7.20 points, or 0.35 percent, at 2,087.82. The Nasdaq Composite Index <.IXIC> was up 27.53 points, or 0.56 percent, at 4,944.85.

The MSCI International ACWI Price Index <.MIWD00000PUS> rose 0.2 percent.

The pan-European FTSEurofirst index of leading 300 shares <.FTEU3> gained 1.6 percent. European equities, which were closed Monday for the Easter holiday, were also supported by comments from Greek Finance Minister Yanis Varoufakis, who on Sunday said the country intended “to meet all obligations to all its creditors, ad infinitum,” seeking to quell fears of a default.

In currency trading, the U.S. dollar index <.DXY>, which measures the greenback against a basket of currencies, rose 0.9 percent. The euro fell 0.7 percent to $ 1.0848 while the yen fell 0.7 percent against the dollar.

Bucking the trend, the Australian dollar rose 0.7 percent to $ 0.7644 after the country’s central bank surprised some by leaving interest rates at a record low 2.25 percent.

The benchmark 10-year U.S. Treasury note fell 3/32 in price, pushing the yield up to 1.9108 percent.

In commodities, U.S. crude oil futures jumped 2.3 percent to $ 53.31 per barrel, building on a rise of more than 6 percent on Monday. The commodity recovered from an earlier drop of more than 2 percent. Brent crude rose 1 percent to $ 58.69 per barrel.

Gold prices fell 0.2 percent as the dollar rebounded. Silver lost 0.9 percent while copper rose 1.4 percent.

(Editing by Dan Grebler; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)