Stocks at 6-month high, gold hits record on Fed

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Stocks at 6-month high, gold hits record on Fed

posted on Oct 13, 2010 03:48PM

* Fed minutes, Intel results whet risk appetite

* MSCI benchmark stock index highest since mid-April

* Dollar drops as Fed seen easing; gold hits record high (Updates with European markets' close)

By Walter Brandimarte

NEW YORK, Oct 13 - World stocks jumped to a six-month high, gold hit another record, and the dollar weakened on Wednesday on expectations that the Federal Reserve will further loosen monetary policy, boosting risk appetite.

Gold prices reached an all-time high of $1,374.80 an ounce as investors sought protection against a sinking dollar. Other commodities also rose, and oil prices climbed more than 2 percent.

Minutes from the Federal Reserve's September meeting on Tuesday showed officials discussed the possibility of buying more longer-term U.S. government debt to drive borrowing costs lower and ways to nudge the public into expecting higher levels of inflation in the future to spur spending.

"The Fed minutes certainly induced a rally right across the board," said Peter Cardillo, chief market economist at Avalon Partners in New York. "We are seeing the dollar lower, gold and oil prices higher. That is adding risk flavor to the market."

Strong corporate results also bolstered stock markets, including dominant chipmaker and Dow component Intel Corp's (INTC.O) upbeat fourth-quarter sales and margin forecast.

MSCI's benchmark All-Country World equity index .MIWD00000PUS rose 1.3 percent on the day to hit its highest level since mid-April.

The Dow Jones industrial average .DJI rose 119.20 points, or 1.08 percent, to 11,139.60, while the Standard & Poor's 500 Index .SPX gained 11.95 points, or 1.02 percent, to 1,181.72. The Nasdaq Composite Index .IXIC shot up 27.48 points, or 1.14 percent, at 2,445.40.

EUROPEAN STOCKS RALLY

The FTSEurofirst 300 .FTEU3 index of top European shares rose 1.42 percent to close at 1,086.52, a three-week high. The index was boosted by shares of miners such as BHP Billiton (BLT.L), which jumped 4.16 percent.

The prospect of a second round of U.S. quantitative easing, which equates to printing more money, pushed the Australian dollar to its highest level against the U.S. dollar since the Aussie was allowed to float freely in 1983.

The Australian dollar AUD=AUD=D4 climbed as high as US$0.9929, less than 1 cent to parity.

Source: http://www.reuters.com/article/idUSN1323941820101013

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