U.S. Stocks

U.S. stocks jumped Monday, with blue chips clawing back more than one third of last week's steep losses, as investors bet that efforts will be taken to stem Europe's sovereign-debt crisis. The Dow Jones Industrial Average climbed 272.38 points, or 2.5%, to 11043.86, in choppy trading that saw the measure leap to an early triple-digit gain, give almost all of it back midsession and then move higher still. The activity follows the Dow's biggest weekly point drop since October 2008. The Standard & Poor's 500-stock index gained 26.52 points, or 2.3%, to 1162.95. The Nasdaq Composite was the laggard, gaining 33.46 points, or 1.4%, to 2516.69, after spending much of the day in negative territory. Stocks closed near session highs following reports that a special purpose vehicle to help stem Europe's debt-crisis contagion was in advanced development. Those reports followed a European Central Bank official's endorsement of a more aggressive bailout plan and another official's remark that the ECB can't rule out an interest-rate cut. Technology stocks were the session's underperformers. Apple lost 0.3% after Wall Street analysts speculated that the company is planning iPad production cuts. Also weighing on the technology sector, Freescale Semiconductor Holdings fell 1%as the company lowered its quarterly sales outlook. MEMC Electronic was one of the S&P 500's weakest stocks, shedding 2.8%. The financial sector was the strongest in the S&P 500. J.P. Morgan Chase was the strongest blue chip, rising 7%, followed by Bank of America, which gained 4.6%. Boeing advanced 4.2% after the aerospace and defense company delivered its first 787 Dreamliner to Japan's All Nippon Airways Sunday.

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Europe

European stocks rose Monday, with bank shares providing much of the upside, amid hopes the European Central Bank is working on new ways to alleviate the region's debt crisis. The Stoxx Europe 600 index closed up 1.9% at 220.28, France's CAC-40 index ended up 1.8% at 2859.34 and Germany's DAX added 2.9% to 5345.56. However, the U.K.'s FTSE 100 index, which is heavily weighted toward mining shares, underperformed its European peers, as key metals prices slipped. The London index ended up 0.4% at 5089.37. There was some initial disappointment following the weekend meeting of the World Bank and International Monetary Fund, but reports that the European Financial Stability Facility may be extended by as much as EUR3 billion and the region's banks recapitalized quickly set the tone. As a result, recently battered bank issues were among the best performers, with the Stoxx Europe 600 index for the sector ending up 3.8% at 127.92. Intesa Sanpaolo rose 8.3% in Milan, Deutsche Bank climbed 8.7% in Frankfurt and Barclays rallied nearly 7% in London. French banks also rose, with Societe Generale up 5.4%, BNP Paribas up 4% and Credit Agricole up 3.7%. Heightened expectations of an ECB rate cut added to the upbeat mood, after ECB governing council member Ewald Nowotny said cuts can't be excluded, according to Market News International. But Nowotny's comments were tempered somewhat by fellow governing council member Yves Mersch, who called talk of an imminent rate cut wild. Deutsche Bank said the most immediate impact the euro-zone PMI which fell more sharply than expected in September will have on policy is likely a 0.50 percentage-point rate cut at the Oct. 6 meeting. At the same time, investors took heart from talk that policy makers may discuss the possibility of restarting covered-bond purchases at their next policy meeting. A stronger than expected reading from Germany's closely watched Ifo business-climate index, which fell to 107.5 from 108.7 in August, against expectations of a reading of 106.5, also provided some support. However, warier market participants pointed out that the reading still showed a third consecutive month of deterioration in German business confidence and a 15-month low.

Asian Stocks

Asian stocks fell sharply Monday, adding to recent losses, as a lack of apparent progress on Europe's sovereign-debt problems fueled risk aversion and sent investors out of equities. While the Group of 20 nations meeting in Washington offered new steps, such as leveraging the European Financial Stability Facility through borrowing, nothing concrete emerged. Japan's Nikkei Stock Average ended down 2.2% at 8374.13, making up for lost time Friday when the Tokyo market was closed for a holiday. It was the index's lowest close since April 2009. Hong Kong's Hang Seng Index fell 1.5% to 17407.80, at one point dipping below 17000 for the first time since May 2009. The Shanghai Composite Index lost 1.6% to 2393.18, its lowest close since July 2010, and South Korea's Kospi lost 2.6% to 1652.71, its lowest close since June 2010. Southeast Asian markets bore the brunt of the selling amid fund outflows, which also triggered margin calls. Thailand's SET index was down 5.7% at 904.06, after earlier being as much as 9.4% lower and hitting its lowest point in more than a year. The Jakarta JSX Index, which fell 11% last week, ended Monday down 3.2% at 3316.14; it earlier was down as much as 6.1%. Further weighing on sentiment, German Deputy Finance Minister Joerg Asmussen was quoted as saying in Washington Sunday that extra funding for Greece was unlikely to be granted at an Oct. 3 meeting, countering previous expectations. In Tokyo, exporters were hobbled by the weakness of the euro, which touched its lowest level against the yen since 2001. Sony lost 4.1%, Sharp fell 4.9% and Toyota Motor shed 1.7%. In line with heavy losses for many commodities Friday and again Monday, investors pulled out of resource-sector firms, with Japanese energy major JX Holdings down 5.6%. The earlier falls in commodities prices also slammed Japanese trading houses, with Mitsui & Co. losing 5.9%, Mitsubishi down 7.9%, and Itochu dropping 7.6%. Zhaojin Mining tumbled 18% in Hong Kong and Sumitomo Metal Mining fell 7% in Tokyo.

Commodities

Base metals on the London Metal Exchange closed mostly lower Monday, although off the lows of the day, as market players looked to equity markets and developments in the unfolding euro-zone debt crisis for direction. At the close, LME three-month copper was 1.2% lower at $7,266 a metric ton, well above the 14-month low of $6,800/ton hit in early trade. The rest of the complex was lower, except for tin which was up 0.6% at $20,325/ton at the close of open outcry trading. Crude prices settled marginally higher Monday, but the slight gain provided little optimism for traders and analysts who see declines on the horizon. In a topsy-turvy session, oil trading erased early losses and largely followed the lead of U.S. stocks, if not moving at the same magnitude. Light, sweet crude futures for November delivery settled up 39 cents, or 0.49%, at $80.24 a barrel on the New York Mercantile Exchange, barely ending a three-session losing streak. Brent crude futures on ICE Futures Europe settled down 3 cents, or 0.03%, to $103.94 a barrel. Gold ended below $1,600 for the first time since late July, while silver posted mild losses, as the urge to raise cash curbed interest among some cautious buyers. The most actively traded gold contract, for December delivery, settled $45, or 2.7%, lower at $1,594.80 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver futures settled 1.25 cents, or 0.4%, lower at $29.976 a troy ounce on the Comex. The contract touched a low of $26.150.

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