LONDON (Reuters) – European stock markets rose on Friday as a ban on short-selling financial shares prompted investors to creep back into battered banking shares, although concerns over the health of French banks kept the mood edgy.

World shares edged up but were still poised to end another week in the red as investors continued to dump riskier assets, bringing losses so far this month to more than 10 percent.

France, Italy, Spain and Belgium have imposed a ban on short selling in a group of banks and financial institutions, after a flurry of rumors — all officially denied — knocked a third of the value off some European bank shares.

Traders said the measure would provide temporary relief to jittery investors, but concerns about euro zone debt problems and a deteriorating outlook of the global economy were set to keep trading erratic.

“Something needed to be done, the rumors were silly and the market was full of emotion and fear. So this provides a break in that, so not bad,” a London-based fund manager said.

“I don’t think it works long term but should buy some time.”

The FTSEurofirst 300 index of top European shares 1.4 percent, clawing back after falling more than 1 percent in early trade. The MSCI world equity index rose 0.3 percent.

The STOXX Europe 600 Banks index rose around 2 percent.

Shares in BNP Paribas, and BBVA each rose more than 1 percent, but those in Societe Generale oscillated between positive and negative territory.

Societe has borne the brunt of the banking sector sell-off, with its shares falling 33 percent so far this month as investors become more worried about the exposure of French banks to debt issued by Italy and other weak euro zone countries.

These concerns limited overall stock market gains, and the short-selling ban was not enough to convince investors to significantly extend the previous day’s sharp rally. European shares were poised to end the week nearly 3 percent lower.

Ion-Marc Valahu, who helps run Geneva-based fund management firm ClairInvest, said the short-selling ban might not have that much of an impact in the long term.

“In the short-term it will help calm things down, but if you look at what happened at Lehman during the crisis, it didn’t do much,” Valahu said.

Markets have been extremely volatile amid rumors about the health of European banks, mounting questions about the stability of money markets and growing fears that the U.S. economy may tip back into recession or a prolonged period of tepid growth.

The rise in share markets drove the euro to a session high against the dollar although traders said it remained at risk of renewed selling. Against a basket of currencies, the dollar was little changed on the day at 74.564.

German Bund futures rose in volatile trade as investors unnerved by the recent sell-off in stocks and the escalation in the euro zone debt crisis flocked to the safest debt in the 16-nation bloc.

Oil prices fell, with Brent crude pushing as much as 1 percent lower on the day and reversing gains made in the last two days as concerns about dwindling demand from industrialized nations put some commodities under selling pressure.

The safe-haven Swiss franc extended losses after a dramatic sell-off the previous day as investors dumped the safe-haven currency given the possibility that the Swiss central bank may step up measures to stem its strength.

Analysts said the Swiss currency would continue to benefit from demand from risk-averse investors, but it remained at risk of near-term selling due to the possibility the SNB may soon implement drastic measures as a disincentive to overseas investors from holding too many francs.

“There is no end in sight to the euro zone debt crisis and the U.S. slowdown, both of which are negative for risk and should support the Swiss franc,” said Gavin Friend, currency analyst at nabCapital.

“But there is something brewing on the Swiss side of things and if the SNB can manage to crimp demand for Swiss francs by pushing down yields and instigate even more negative yields, then we could the euro rebounding.”

(Additional reporting by Blaise Robinson in Paris, Anirban Nag)

NEW YORK (Reuters) – U.S. stocks extended gains on Thursday after trade data showed record U.S. exports, easing concerns about a stalled economic recovery following a six-day slide that left the equities market oversold.

Various economists said the spike in exports in April could prompt upward revisions of gross domestic product growth in the second quarter.

“You’re seeing exports picking up pretty dramatically, a positive data point, and a market that had gone down six days in a row,” said Eric Kuby, chief investment officer of North Star Investment Management Corp in Chicago, in reference to the report showing narrower U.S. trade deficit for April.

“You finally have a day with a reason for people to start buying stocks again. The appetite has come back.”

The S&P 500 fell the last six days and was down more than 6 percent from a peak in early May, while the Nasdaq Composite had nearly erased its gains for the year so far.

“For a while, people have been waiting for an entry point,” Kuby said. “Some market participants are saying, ‘We’ve got this pullback. Let’s get invested.’”

The link to the Japanese earthquake in the trade data, which showed a drop in imports from Japan, also backs up widespread opinion that the economy’s recent soft patch is only temporary and not pointing to a dip back into recession in the United States.

S&P sectors most linked to a growing economy led the market higher, with a materials index (.GSPM) up 2.1 percent and an energy index (.GSPE) up 1.3 percent. The Morgan Stanley cyclical index (.CYC), which is down more than 5 percent in June, rose 1.2 percent on Thursday.

The Dow Jones industrial average (.DJI) gained 118.63 points, or 0.98 percent, to 12,167.57. The Standard & Poor’s 500 Index (.SPX) added 12.64 points, or 0.99 percent, to 1,292.20. The Nasdaq Composite Index (.IXIC) rose 15.41 points, or 0.58 percent, to 2,690.79.

The mood remained fragile despite the rebound, with some analysts still expecting the S&P 500 to retest its March low after a string of data, including the latest payrolls report, provided little room for optimism.

“A test of 1,250 is pretty likely in the next couple of weeks,” said John Canally, an investment strategist and economist for LPL Financial in Boston. “We do think it’s going to hold, unless we get another round of bad news from Europe. Data from May is going to look weak, but earnings estimates are still relatively unchanged.”

The PHLX semiconductor index (.SOX) bounced off its 200-day moving average and was holding above 410, a key level that gave strong support in March. It was up 0.6 percent on Thursday.

“It’s telling you that these supply-chain disruptions in Japan may be ebbing, and once that happens, business can tick up again,” LPL’s Canally said. “Demand is still out there. Consumers just couldn’t get what they wanted.”

Texas Instruments Inc (TXN.N) shares rose 1 percent to $32.99 even after the company cut its earnings and revenue forecasts late on Wednesday. The company blamed the shortfall on major client Nokia’s ailing cellphone business.

Reflecting the appetite for tech stocks, shares of Fusion-io (FIO.N) surged 21.6 percent to $23.10 in their first day of trading — up from an initial public offering price of $19. Earlier, the stock was up as much as 34.2 percent at a session high of $25.50. The Salt Lake City, Utah-based company makes storage memory hardware and software for data centers.

But shares of China-based Taomee Holdings Ltd (TAOM.N) fell 4.8 percent to $8.57 in their stock market debut as U.S.-listed Chinese companies come under more scrutiny following a series of accounting scandals. U.S. regulators, brokers and investors are sharpening their look at Chinese companies.

Details of Thursday’s economic data showed the U.S. trade deficit narrowed unexpectedly in April as U.S. exports rose to a record and imports from Japan tumbled more than 25 percent.

A separate report showed the number of Americans filing new claims for unemployment benefits rose by 1,000 last week, while continued claims fell more than expected.

(Reporting by Rodrigo Campos; Additional reporting by Clare Baldwin; Editing by Jan Paschal)

(This story is corrected in the 10th paragraph to say the low referenced is from March 2011, not 2010)

NEW YORK (Reuters) – Wall Street stock indexes fell for a fourth straight day on Thursday as a massive sell-off in commodities spilled over into other markets, forcing investors out of higher-risk assets and rattling equities markets before Friday’s U.S. payrolls data.

Oil suffered the biggest one-day price drop ever for the Brent futures contract, which settled down 8.6 percent at $110.80 per barrel. That drove oil shares lower, making the energy sector (.GSPE) the worst performer on the S&P as it fell 2.3 percent.

The CBOE volatility index (.VIX) jumped above its 50-day average before closing up 6.6 percent at 18.20, its highest closing level since March 28. The move signals investors are willing to pay more for protection for their equities exposure.

Adding to a recent spate of poor economic data, weekly applications for unemployment insurance rose to an eight-month high, setting off alarms a day before the April unemployment report.

“It may very well be the case that the commodity price bubble has burst,” said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany.

Silver prices were set for the deepest weekly decline in nearly 30 years. The iShares Silver Trust exchange-traded fund (SLV.P) tumbled 11.9 percent on its highest volume ever, near 295 million shares. Its 50-day volume average stands below 60 million shares.

The Reuters/Jefferies CRB index (.CRB) that tracks commodity prices fell 4.9 percent and was on track for its biggest weekly fall since late 2008.

The Dow Jones industrial average (.DJI) dropped 139.41 points, or 1.10 percent, to 12,584.17. The Standard & Poor’s 500 Index (.SPX) fell 12.22 points, or 0.91 percent, to 1,335.10. The Nasdaq Composite Index (.IXIC) lost 13.51 points, or 0.48 percent, to 2,814.72.

The S&P 500 fell through its 14-day average, but still closed above 1,333 — a level that could become an important market support, limiting future losses.

About 9.26 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, in a third consecutive trading day with volume above the year’s average, indicating investors are selling with conviction.

Declining stocks outnumbered advancing ones by a ratio of about 8-to-5 on both the NYSE and Nasdaq exchanges.

Consumer-related shares also fell but were the best performers as the drop in crude was seen lessening the financial burden on individuals of high gasoline prices.

U.S. retailers earlier warned of rising costs and cautious consumers even as a late Easter boosted sales of clothing and other holiday-related items in April, helping many beat sales expectations.

Ross Stores (ROST.O) gained 6.9 percent to $78.55 after its sales beat forecasts.

An index of airlines (.XAL), a sector sensitive to fluctuations in energy costs, advanced 3.2 percent, its largest daily gain in almost two months.

Helping the Nasdaq, Electronic Arts Inc (ERTS.O) closed at its highest level since August 4 2009, up 8.8 percent at $21.68 a day after posting strong earnings.

(Reporting by Rodrigo Campos; additional reporting by Caroline Valetkevitch; Editing by Gary Crosse)

NEW YORK (Reuters) – Wall Street closed a stellar week on Friday after recent economic data, including a stronger-than-expected labor market report, bolstered optimism that the economy would not fall back into recession.

The S&P 500 gained 3.8 percent for the week, its best in eight, setting the stage for a more bullish mood when markets re-open Tuesday after the long Labor Day weekend. U.S. Treasury debt yields have risen from levels reflecting expectations of another recession.

Stock sectors sensitive to economic swings like technology and banks led the week’s gains. On Friday, the S&P financial sector index (.GSPF) rose 2.2 percent, with Goldman Sachs (GS.N) up 5.4 percent at $147.29 and Janus Capital (JNS.N) up 6.6 percent at $10.12.

“Equity markets had priced in the non-trivial probability of a double dip, and what you’re seeing is that fear pricing is coming out,” said Mike Dueker, head of economics at Russell Investments in Tacoma, Washington.

U.S. payrolls fell for a third straight month in August, the Labor Department said, but the loss of 54,000 non-farm jobs was far less than the 100,000 expected by economists polled by Reuters, and private hiring surprised on the upside.

“Recovery will be slow, but at least reliable, and that should add some tailwinds (for stocks) the rest of the year,” Dueker said.

The Dow Jones industrial average (.DJI) shot up 127.83 points, or 1.24 percent, to 10,447.93, marking a move back into the black for the year. The Standard & Poor’s 500 Index (.SPX) gained 14.41 points, or 1.32 percent, to 1,104.51. The Nasdaq Composite Index (.IXIC) rose 33.74 points, or 1.53 percent, to 2,233.75.

The S&P 500 closed above 1,100 for the first time since August 10. Momentum measures, including the moving average convergence-divergence, indicate the benchmark is poised for more gains.

But the upward move faces strong resistance, with the 200-day moving average near 1,116. Chartists point to 1,130 as key resistance, tested in June and early August, with both failures opening the door to steep declines.

Stocks sold off sharply through August on concerns the U.S. economy could be headed for a double-dip recession. But a report that showed the manufacturing sector grew more than expected last month sparked a rally on Wednesday that lifted stocks to their best day in eight weeks.

In addition to the S&P 500′s sharp weekly percentage gain, the Dow rose 2.9 percent for the week and the Nasdaq advanced 3.7 percent.

Technology stocks outperformed the market this week. The PHLX semiconductor index (.SOX) has gained 6.9 percent in the past three days, its best such run since mid-June.

Video game maker Take-Two Interactive Inc (TTWO.O) jumped 7.3 percent to $9.50 a day after its quarterly profit smashed Wall Street’s expectations of a loss, and it raised its forecast.

On the downside, Campbell Soup Co (CPB.N) dropped 3 percent to $36.21 after posting lower-than-expected quarterly sales and forecasting growth below its long-term target as it grapples with a weak economy.

About 6.6 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, far below last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 18 to 5, while on the Nasdaq, about 17 stocks rose for every five that fell.

(Reporting by Rodrigo Campos; Additional reporting by Edward Krudy; Editing by Jan Paschal)

HONG KONG (Reuters) –
Stocks and commodities jumped on Monday and U.S. Treasuries fell as investors bet China will allow the yuan to rise after promising more currency flexibility, easing political tensions with the West and encouraging investors to snap up riskier assets.

The spot yuan rate edged up to 6.8110 against the dollar, its strongest level since September 2008, after China’s central bank signaled at the weekend that it was unshackling the currency from its de facto 23-month-old peg.

Many analysts see the currency strengthening further in coming days, albeit at a very modest pace, with greater purchasing power of the world’s third-largest economy becoming a strong global investment theme.

“This provides a positive psychological boost to Asian financial markets, so not just Asian equity markets but also Asian currencies and bond markets as well,” Khiem Do, head of Asian multi asset at Baring Asset Management in Hong Kong, told Reuters Insider television.

Do’s exposure to China was domestically focused, with bets on property and infrastructure stocks. He also was bullish on Chinese companies with U.S. dollar-denominated debt.

Oil, metals and other commodity prices rose on hopes China’s increased purchasing power will boost demand, and currencies from economies that have a large share of exports to China — Australia, Taiwan, South Korea, Brazil — were expected to keep strengthening.

China’s central bank said late on Saturday it was ready to make the yuan more flexible, citing a global economic recovery and more balanced external trade.

On Sunday Beijing ruled out a one-off move, saying there was no basis for any big appreciation and that it will keep the exchange rate at a basically stable level.

Nevertheless, the apparent policy change triggered a rally in riskier assets, with investors growing more confident about China’s key role in the global economic recovery, offsetting worries about Europe’s festering sovereign debt crisis.

Japan’s Nikkei share average (.N225) jumped 2.4 percent to a one-month high, with China-linked stocks performing particularly well. Shares of Hitachi Construction (6305.T) and Komatsu (6301.T) rose 6.6 percent and 4.7 percent, respectively.

Both companies assemble and sell their products in China.

The rise in the Nikkei was welcome news after government data showed foreign investors had sold $10 billion of Japanese stocks two weeks ago, the largest weekly outflow since March 2008.

“We may well be able to say that the heavy foreign selling of two weeks ago has now come to an end,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

The MSCI index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) surged nearly 3 percent, led by the materials, energy and industrial sectors.

The MSCI index has already retraced more than half the losses incurred in the past two months resulting from concerns about Europe’s debt crisis, though is still down 3.2 percent this year.

Hong Kong’s stock market (.HSI), the gateway to China for most global equity investors, rose 2.8 percent while the Shanghai composite index (.SSEC) gained 2.1 percent.

Chinese airline stocks were a big target, with China Southern Airlines (1055.HK) gaining 8 percent, on hopes that a stronger yuan will help reduce fuel costs.

Initial gains slipped at one point after China’s central bank left the yuan’s daily mid-point unchanged from Friday, but upward momentum recovered as the currency rose in the spot market.

U.S. stock futures rose 1.2 percent, pointing to a stronger open on Wall Street later in the day.

GATEWAY TO CHINA

Emerging Asian currencies also rose sharply.

Reasons for strength were two-fold: Asian reserve managers would not have to curb their own currency strength as much for competitive reasons if China lets the yuan rise, and hopes for more exports to China.

The U.S. dollar dropped 2.5 percent against the Korean won and was on pace for the biggest single-day decline in 13 months. The dollar was also down 1.6 percent against the Malaysian ringgit.

“It’s going to be a softly-softly approach in our view (for yuan appreciation). It is good for risk appetite, it is good for Asian currencies in general,” said Mitul Kotecha, head of global foreign exchange strategy with Credit Agricole CIB in Hong Kong.

The euro and Australian dollar were steady on the day, having surrendered early gains after China left the daily mid-point of the yuan’s exchange rate unchanged from Friday.

The euro was at $1.2430 and the Australian dollar was at US$0.8812.

U.S. Treasuries fell as cash was moved to riskier plays offering potentially higher returns. The benchmark yield on the 10-year note was up 6 basis points from late Friday in New York to 3.28 percent.

Commodities prices rallied as well on expectations that China’s already voracious demand for raw materials would only increase.

Brent crude futures were up 1.7 percent to $79.52 a barrel and U.S. crude was up 1.9 percent to $78.67 a barrel, at the highest in six weeks.

Three-month copper on the London Metal Exchange rose 1.3 percent or $81 a metric ton to $6,516.

U.S. soybeans and grains futures also rose.

(Additional reporting by Elaine Lies in Tokyo and Kei Okamura in Hong Kong)