NEW YORK – Stocks and government bonds fell Tuesday as commodities rallied to two-year highs.

Silver, soybeans and copper jumped to levels last seen in October 2008 as investors moved money into hard assets in anticipation that a massive economic stimulus plan announced by the Federal Reserve last week will continue to weaken the dollar. Investors are expecting that commodities will hold their value even if the dollar falls.

The Fed plans to buy $600 billion in U.S. government bonds over the next six months in an effort to push interest rates even lower and encourage borrowing and spending. It’s a tactic called quantitative easing, one that the Fed used successfully in 2008 to restore confidence in financial markets at the height of the credit crisis.

“The market is still being driven by the Fed’s actions and it will be for a while,” Dirk van Dijk, senior equity strategist at Zacks.com.

Treasury prices fell despite a strong auction of 10-year notes. Investors are concerned that demand may be weak for 30-year bonds in an auction upcoming Wednesday. The price of the 30-year bond was down sharply, losing about two full points, or $2 per $100 in face value. Its yield rose to 4.23 percent, the highest level since June 10.

The 30-year bond wasn’t one of the maturities being heavily targeted by the Fed’s purchasing program announced last week, and its long maturity makes it more sensitive to inflation than shorter-term notes.

Many investors worry that the Fed’s bond-buying program could lead to a jump in inflation down the line, which would erode the value of all bonds since their fixed payouts would become worth less over time. With the Fed now focused on encouraging some inflation, “it might be hard for investors to convince themselves to buy” at Wednesday’s auction, said John Briggs, a fixed income analyst at RBS.

The dollar has been falling against other currencies in anticipation of the Fed’s stimulus program, but it gained 0.9 percent against an index of other currencies Tuesday as new troubles emerged in Ireland, one of the weaker countries that use the euro, Europe’s shared currency.

Investors are concerned that Ireland’s government will not be able to pass additional spending cuts and will have to ask for financial assistance. Greece, another member of the euro club, was forced to seek a bailout from other European countries in April after investors dumped the countries bonds in the wake of a fiscal crisis there.

The Dow Jones industrial average fell 60.09, or 0.5 percent, to 11,346.75. The broader Standard & Poor’s 500 index fell 9.85, or 0.8 percent, to 1,213.40, while the technology-focused Nasdaq composite index fell 17.07, or 0.7 percent, to 2,562.98.

Every industry group within the S&P 500 fell. Financial shares, which fell 2.2 percent, were the worst performing industry group.

Gold settled at $1.410.10 an ounce, up $6.90. The precious metal is hovering near record levels in dollar terms but is still well below its peak in the early 1980s after accounting for inflation.

The weakening dollar has been benefiting gold as investors seek other assets seen as safe places to park money. Some gold investors see the metal as a hedge against national currencies losing their value as a result of inflation.

Silver rose, jumping 5.4 percent to settle at $28.906 an ounce. The metal’s large gains may be a result of traders buying silver because it had fallen below its typical price relationship with gold. Gold usually trades at 50 times the price of silver, said Rick de los Reyes, a metals and mining analyst at T. Rowe Price.

“Gold is someone’s first instinct when they are buying for all of the reasons they’re buying gold right now, and silver usually lags somewhat,” he said. Silver, which has a greater use for industries than gold, is rising alongside other industrial metals like platinum and copper.

In corporate news, Chevron Corp. shares fell 1.5 percent after announcing a deal to buy the natural-gas producer Atlas Energy for $4.3 billion, following other natural gas deals by rival energy giants Exxon Mobil Corp. and Royal Dutch Shell PLC.

Shares of Dean Foods Co. sank 17.9 percent after the country’s largest dairy company announced disappointing results. The company has slashed prices to compete with supermarkets selling milk under their own labels. Dean Foods shares have slumped 53 percent for the year, making it one of the worst performing stocks in the S&P 500 index.

LONDON (AFP) – London shares soared to a two-year high on Thursday in reaction to the Federal Reserve’s decision to pump 600 billion US dollars (373 billion pounds) into the US economy to boost its recovery.

The FTSE 100 index ended 1.98 percent higher to close at 5,862.79 points.

Lloyds Banking Group (LBG) was the most traded stock, seeing 176 million shares switch owners, followed by Vodafone, which saw 103 million units change hands.

Investment business Man Group was the top blue-chip performer, adding 37.1 pence — or 14.6 percent — to end at 290.8, followed by miner Xstrata, which rose 90 pence — or 7.05 percent — to end at 1366.5.

Rolls-Royce was the biggest blue-chip faller after a Qantas Airways Airbus A380 airliner was forced to make an emergency landing in Singapore after one of its four Rolls-Royce Trent 900 engines exploded.

Qantas chief executive Alan Joyce said the plane had experienced “a significant engine failure”.

“We will suspend those A380 services until we are completely confident that Qantas safety requirements have been met,” Joyce told reporters in Sydney.

Rolls shares shed 33 pence — or 5.04 percent — following the incident to end at 621.5.

Rolls shares were joined at the rear by supermarket giant WM Morrisons, which was down 11.3 pence — or 3.9 percent — to end at 278.7.

Meanwhile, the pound rose against the dollar but slipped against the euro.

At 17:04 BST, sterling was trading at 1.6256 dollars, up from 1.6092 at the same time on Wednesday, while the currency stood at 1.1435 euros, down from 1.1455 euros over the same period.

LONDON (AFP) – European equities surged on Friday and the dollar jumped above 85 yen as financial markets welcomed a better-than-expected payrolls report in the United States.

The Frankfurt stock market leapt 1.17 percent, London bounced 1.13 percent higher and Paris added a hefty 1.72 percent after the upbeat news, which boosted investor appetite for risk.

In foreign exchange trade, the dollar rose to 85.17 yen from 84.30 yen in New York late on Thursday. The US unit meanwhile wobbled against the euro before pulling level.

And in opening trade, Wall Street’s Dow Jones Industrial Average rallied by 0.90 percent as US investors also cheered the data.

In an eagerly-awaited unemployment report, the US government’s Labor Department revealed on Friday that the American economy lost 54,000 jobs in August.

That was far better than market expectations for a larger loss of 120,000 jobs for last month.

The figures, which are seen as a crucial litmus test for the sputtering economic recovery and President Barack Obama’s policies, spurred European stock markets higher in afternoon deals.

The US unemployment rate meanwhile edged up to 9.6 percent in August, from 9.5 percent in July, showing the recovering economy was still struggling to create jobs.

“It is ‘risk-on Friday’ for the markets following the much better than expected non-farm payrolls numbers,” said Rajesh Patel, analyst at trading firm Spread Co. in London.

“From an almost comatose morning, traders sprung to life, sending indices shooting upwards.

“Those that were expecting a bearish jobs numbers got their fingers burnt,” he added.

“It has been a tremendous start to September for indices, with the Dow Jones and the FTSE 100 already up over 4.0 percent as the bulls make hay while the sun shines.”

However, VTB Capital economist Neil MacKinnon sounded a note of caution over the better-than-expected data.

“Although the US jobs report did not turn out to be a shocker, nevertheless the picture is one of a labour market still in recession,” he warned.

NEW YORK – Bank stocks shot higher Friday after an agreement on a financial regulation bill reassured investors that new rules won’t devastate financial companies’ profits.

Banks outdistanced the rest of the market after congressional negotiators agreed on a bill that increases the regulation of financial companies, but that doesn’t include some of the harshest provisions that the government originally proposed. The legislation imposes new rules on the complex investments known as derivates, but the rules aren’t as strict as investors feared.

It also includes a far milder version of what’s been called the Volcker rule. That rule, named after former Federal Reserve Chairman Paul Volcker, would have banned commercial banks from trading simply to increase their profits, a practice known as proprietary trading.

Analysts said the deal removes a huge cloud that has hovered over the financial industry for much of this year. Investors have feared that intense regulation would devastate bank profits. Now, the market seems to believe that financial companies would do well even with the new limits on their business.

“They come out of this big-time winners,” Bob Froehlich, senior managing director at Hartford Financial Services, said of financial companies. “Two years later, people will look back and say ‘My gosh, nothing really changed.’”

Banks were the market’s big performers on a day when the Dow Jones industrial average fell almost 9 points and the other major indexes had only slim gains.

Goldman Sachs Group Inc. rose 3.5 percent, while JPMorgan Chase & Co. gained 3.7 percent. Bank of America rose 2.7 percent and Citigroup Inc. rose 4.2 percent.

Regional banks also scored big gains. Suntrust Banks Inc. rose 4.7 percent and Synovus Financial Corp. gained 5.3 percent.

Investors had feared that the financial regulation bill would sharply curtail bank profits by limiting financial companies’ ability to trade in derivatives. Companies and investors often use derivatives to hedge against losses. But some derivatives are purely speculative investments, and some of these derivatives have been blamed for contributing heavily to the collapse of the housing market and the 2008 financial crisis.

The legislation calls for most derivatives to be traded on regulated exchanges. But provisions of the bill that were investors’ worst-case scenario, for example, an outright ban on banks’ trading derivatives, were not included in the final agreement. Banks can still trade derivatives related to interest rates, foreign exchanges, gold and silver, investments that have contributed to their big profits. They would have to use subsidiaries with their own funds in order to trade in riskier derivatives. But the parent bank could still keep the profits from those trades.

“The bill could have been a lot worse,” said Alan Valdes, vice president at Hilliard Lyons in New York. “It’s a bill we can live with.”

The legislation also allows banks to invest only up to 3 percent of their capital in private equity and hedge funds. That is a remnant of the original Volcker rule.

The agreement also alleviated another investor concern. A plan that would have had banks paying for the costs of unwinding mortgage giants Fannie Mae and Freddie Mac was not included in the bill that will now go to the House and Senate for final approval.

One reason why investors seem happy with the agreement is that they know banks will continue to lobby in Washington for looser regulations. In other words: The market doesn’t believe that the bill, when it becomes law, will be in stone.

Froehlich also suggested that banks, now having a greater understanding of the regulatory environment, might be more willing to lend. That would help the economic recovery pick up more momentum, he said.

“It was the biggest uncertainty that’s out there,” Froehlich said. “Now that we know what financial reform is all about I really do believe that they are going to start lending again.”

The stock market’s overall gains were limited by the government’s final report on the gross domestic product for the first quarter. The Commerce Department said the GDP, the broadest measure of the economy’s health, rose at a 2.7 percent annual pace rather than the 3 percent previously estimated. The report follows a string of weaker-than-expected economic numbers in the past week and raised investors concerns about the recovery.

The Dow fell 8.99, or 0.1 percent, to 10,143.81. The broader Standard & Poor’s 500 index rose 3.07, or 0.3 percent, to 1,076.76, and the Nasdaq composite index rose 6.06, or 0.3 percent, to 2,223.48.

For the week, the Dow is down 2.9 percent, while the S&P 500 is down 3.6 percent and the Nasdaq is off 3.7 percent. The market fell sharply Wednesday and Thursday in response to the disappointing economic reports.

The indexes fluctuated for much of the day, in part because of the annual reshuffling of stocks in the Russell indexes. That forces investors to buy and sell certain stocks if they have portfolios that follow the indexes.

The Russell 2000 index of smaller companies rose 11.94, or 1.9 percent, to 645.11.

Treasury prices rose, driving down interest rates. The 10-year Treasury note’s yield fell to 3.11 percent from 3.14 percent late Thursday.

Goldman Sachs rose $4.68, or 3.5 percent, to $139.66, while JPMorgan Chase rose $1.41, or 3.7 percent, to $39.44. Bank of America rose 40 cents, or 2.7 percent, to $15.42, and Citigroup Inc. rose 16 cents, or 4.2 percent, to $3.94.

Suntrust Banks rose $1.14, or 4.7 percent, to $25.51. Synovus gained 14 cents, or 5.3 percent, and closed at $2.80

Almost four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to a heavy 6.28 billion shares, up from 4.94 billion on Thursday. The big volume was the result of the buying and selling in Russell index component stocks.

The FTSE-100 index in London fell 1 percent, while Paris’ CAC-40 index fell 1 percent and Frankfurt’s DAX index lost 0.7 percent. Earlier, the Nikkei 225 index in Tokyo closed down nearly 2 percent.

LONDON (AFP) –
Global equities surged on Monday when investors welcomed a promise by China to relax constraints on the yuan, ahead of this weekend’s G20 summit of world leaders in Canada.

China said over the weekend that it would allow the yuan more flexibility in adjusting to market forces.

This was widely seen as a move to head off a dispute with the United States over exchange rates at the looming Group of 20 gathering in Toronto on June 26-27.

In early trading, Frankfurt shares leapt 1.39 percent, London jumped 1.13 percent and Paris gained 1.61 percent.

The European single currency climbed against the yen and dollar, as the Chinese move encouraged investors to buy the risk-sensitive euro.

The yuan climbed on Monday to the highest level against the dollar for five years.

And oil prices rose strongly, breaching 79 dollars per barrel on expectations of higher demand from Chinese consumers.

“Investor sentiment has improved quite dramatically over the weekend, with the news that China has pledged to allow its yuan to appreciate, helping to drive all major markets higher,” said analyst Joel Kruger at trading website DailyFX.

“Global equity, commodity and currency prices have all jumped out to a good start in the early week, and it will be interesting to see just how long this development is able to keep a more broadly cautious market afloat.”

In Asia, the Tokyo stock market rallied 2.43 percent and Hong Kong leapt 3.08 percent.

Shanghai jumped 2.90 percent, Sydney won 1.33 percent and Singapore picked up 1.62 percent in value.

“Asian equity markets were stronger across the board … as the Chinese authorities signal preparedness to allow resumed appreciation of the yuan,” said analyst Bernard McAlinden at NCB stockbrokers in Dublin.

“This is a positive move that de-fuses protectionist tensions between the United States and China, while allowing the re-balancing process in global trade and credit flows to continue.”

China’s central bank said at the weekend that it would “strengthen the flexibility” of the yuan exchange rate, boosting hopes that Beijing was ready to adjust a two-year-old dollar peg and allow the currency to rise.

However, the People’s Bank of China also insisted there would be no “large swings” in the currency and ruled out a one-off revaluation.

Beijing’s move comes as it faces mounting pressure to strengthen the yuan ahead of the G20.

The currency, effectively pegged at about 6.8 to the dollar since 2008, has been allowed to move within a 0.5-percent range on either side of the peg.

The central bank said on Saturday it would maintain the existing trading band.

The Chinese currency surged on Monday to 6.8089, its highest level since a revaluation by Beijing in July 2005 but still within the 6.7934 and 6.8616 trading range.

Markets welcomed the move as it has been a constant irritant between China and other nations, particularly the US, where lawmakers claim Beijing deliberately undervalues its currency by about 40 percent to boost its exports.

Some economists argue that inflexibility in the yuan-dollar exchange rate was a root factor behind the global financial crisis.

They hold that it prevented foreign exchange rates from helping to reduce imports into the United States and the matching build-up of capital in China, much of which was used to buy US treasury debt and helped keep US interest rates down.

Senior European policymakers also applauded the statement by by Chinese authorities, and called for further steps as a way to boost growth in China and the world economy.

“The European Central Bank (ECB) and the President of the Eurogroup Jean-Claude Juncker welcome the decision … to further reform the exchange rate regime of the renminbi (yuan),” the ECB said in a statement.

They also called for a “strong and stable international financial system” and noted that volatile exchange rates have the potential to harm economic activity.

“Given China’s important role in the global economy, we encourage the authorities to allow for greater flexibility of the RMB (yuan) exchange rate as a means of promoting balanced growth in China and in the world economy.”