US and European shares rose on Monday as a $68 billion pharmaceutical takeover and a bright spot in US housing data spurred investors' optimism while oil prices rose on speculation supply cuts were taking hold. Britain's Barclays added to the positive tone after it said it did not need to raise fresh capital, sending its battered shares soaring 73 percent and helping a recovery in other financial shares on both sides of the Atlantic. US and eurozone government debt prices fell, weighed by persistent concerns about the amount of new issuance to flood markets this year to fund financial sector bailouts and stimulus packages. In a sign of those concerns, gold climbed above $900 an ounce, the highest level three months. The International Monetary Fund slashed its forecast for 2009 global growth to 0.5 percent from 2.2 percent in its previous economic outlook in November, a source said. The Dow Jones industrial average was up 103.78 points, or 1.28 percent, at 8,181.34. The Standard & Poor's 500 Index was up 13.95 points, or 1.68 percent, at 845.90. The Nasdaq Composite Index was up 25.58 points, or 1.73 percent, at 1,502.87. Financial stocks in Europe surged, driving the FTSEurofirst 300 index of leading European shares 3.2 percent higher at 784.66 points. The index had fallen in 12 of the previous 13 sessions. Worries about a deepening global slowdown in the financial sector have proven enormous hurdles for investors to overcome in January, a month that often sets the tone for the rest of the year. Sales of previously owned US homes rebounded unexpectedly in December, rising 6.5 percent, closing out a bleak year in which prices dropped a record 15.3 percent, the National Association of Realtors said. The euro extended gains against the dollar to a one-week high and the dollar rose against the yen after the U.S. housing data. The dollar was down against a basket of major currencies, with the US Dollar Index off 0.90 percent at 84.813. The euro rose 1.04 percent at $1.3124, and against the yen the dollar rose 0.47 percent at 89.23. US government bond prices were knocked lower on the home sales data, as housing remains a key factor in the credit crisis and the worst US recession in decades. The benchmark 10-year U.S. Treasury note fell 19/32 in price to yield 2.68 percent. The 30-year U.S. Treasury bond fell 62/32 in price to yield 3.41 percent. “If we get any glimmer of hope in housing, that would be a huge change,” said Charlie Smith, chief investment officer of Fort Pitt Capital Group in Greentree, Pennsylvania. US light sweet crude oil rose 5 cents to $46.52 a barrel. Spot gold prices rose $7.80 to $906.20 an ounce. Japan's Nikkei average fell 0.8 percent to close at its lowest level in almost three months. MSCI's index of Asia-Pacific stocks outside Japan rose 0.4 percent. Many Asian markets were closed for the Lunar New Year, while Australia and India were shut for national holidays.
