US markets

The Dow Jones Industrial Average rose above the 12000 mark for the first time in almost three years and flirted with that milestone throughout the session Wednesday, as investors cheered President Barack Obama's State of the Union address and unanimous decision by the Federal Reserve to stay the course on supporting the economy.

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The Dow was up nine points, or 0.1%, at 11985 in afternoon trading, restrained by disappointing earnings from Boeing. Leading on the upside was DuPont, up 2.6%. A finish above 12000 would reclaim a level that the blue-chip index last surrendered in June 2008.The Nasdaq Composite Index rose 19 points, or 0.7%, to 2738, while the Standard & Poor's 500-stock index rose five points, or 0.4%, to 1296, putting it on the cusp of 1300, which it last held in August 2008.

The traversing of 12000, while temporary, was the latest reminder of the durability of the stock market's bull run on a day dominated by headline news from the government and the Federal Reserve, whose massive interventions helped propel markets to the current levels.

The latest statement from the Federal Open Market Committee showed the central bank's commitment to stimulating the economy, with the committee arriving at its consensus decision after a shuffling of the voting membership. Still, the bull market's reliance on the Fed has had some investors questioning the durability of the rally. In the State of the Union speech Tuesday night, Obama challenged lawmakers in both parties to rise above partisan divisions to tackle problems that will enable the U.S. to compete in the global economy. Among his proposals were calls for Congress to lower the corporate tax rate by closing industry-specific loopholes and find spending cuts across the government. The president also called for a five-year freeze on nondefense discretionary spending. Wednesday morning, data on new-home sales came in much stronger than expected, pushing the market higher. Sales increased 17.5% in December from the prior month, rising to a seasonally adjusted annual pace of 329,000 homes.

European markets

Stocks rallied across Europe as auto stocks rose and a brief rise in the Dow Jones Industrial Average above the 12000 level encouraged investors. Anticipation regarding a statement from the Federal Reserve's policy-making Open Market Committee scheduled for release after trading closed added to the rally. Major indexes ended higher, although they gave up some of their gains as the Dow slipped back. The Stoxx Europe 600 index closed up 0.9% at 282.47, bouncing back from a 0.7% drop the prior session. In Frankfurt, the DAX gained 1% to 7121.35. Autos and parts were among the best performers, led higher by Porsche. The company's shares rose 7.1% after it said its vehicle sales in China rose 63% on the year, marking a new annual sales record. Porsche also said talks with Qatar regarding a planned capital increase were positive. Daimler rose 1.9% and BMW added 1.6%. In Paris, the CAC 40 closed 0.7% higher at 4049.07. Renault rose 3.3%. Barclays Capital upgraded the stock to "overweight" from "underweight," while Credit Suisse boosted its target price. French hotels group Accor rose 4.2%. The firm said it opened 41 new hotels in the Asia-Pacific region last year. In London, the FTSE 100 closed up 0.9% at 5969.21. The minutes of the January meeting of the Bank of England's monetary policy committee showed that member Martin Weale joined perennial inflation hawk Andrew Sentance in calling for a 0.25-percentage-point increase in interest rates. Also in London, BG Group shares rose 3.4% after the company confirmed a new discovery of oil off the coast of Brazil. A bullish note on the stock by Morgan Stanley also helped to underpin the share price.

Asian markets

Asian share markets ended mostly higher Wednesday, as faster-than-expected economic growth spurred South Korean stocks and as Chinese and Hong Kong shares got a boost from bargain buying, but Japanese shares fell on a stronger yen and weak U.S. earnings reports. Japan's Nikkei Stock Average fell 0.6%, while South Korea's Kospi added 1.1%. China's Shanghai Composite rose 1.2% and Hong Kong's Hang Seng Index added 0.2%. Stocks in Seoul were bolstered by solid economic growth data showing gross domestic product rose a seasonally adjusted 0.5% in the fourth quarter of 2010 from the third quarter. GDP growth slowed from a 0.7% expansion in the July to September period, but topped expectations for a 0.3% rise. Technology shares and auto makers led gains, with Samsung Electronics climbing 2.4%, while Hyundai Motor and Kia Motors each jumped 4.2%.

Shares in China and Hong Kong got a boost from bargain buying after recent declines on concerns Beijing may tighten monetary policy. Chinese coal mining stocks rose on expectations that rising demand will push up coal prices after the Lunar New Year holidays. China Coal Energy's Hong Kong shares added 0.7% and its Shanghai ones rose 0.6%. Shares of Datang International Power Generation jumped 4.1% in Shanghai and 3.7% in Hong Kong after the company said it expects its 2010 net profit to rise by more than 50% on-year. In Hong Kong, China Merchants was the best-performing blue chip, rising 3.2%, after falling 7.8% over the four previous sessions. A stronger yen and weak U.S. corporate earnings reports triggered profit-taking in Tokyo. Toyota shares dropped 1.9% after the automaker said it was recalling more than 1.7 million vehicles worldwide to fix problems including those related to fuel systems. Shares of Eisai tumbled 5% a day after the drugmaker said it won't file marketing applications for its medicine Eritoran by end-March, as clinical trial results didn't meet the required outcome of lowering the mortality rate in patients suffering from severe sepsis.

Base metals

Base metals closed higher on the London Metal Exchange Wednesday, as bargain hunting set in and risk appetite increased amid healthier equity markets. While tin hit a record high of $28,775 a metric ton, nickel reached $26,610/ton, its highest price in more than a year. At the PM kerb close, tin was up 1.5% at $28,600/ton, while nickel had risen 2.2% to $26,475/ton. Industrial metals, which are used widely in manufacturing and construction, often benefit from strong equity markets, which are seen as a proxy for the wider economy. However, market participants remained cautious of hailing a reversal in fortunes for the recently timid metal markets, which have suffered in the past week from renewed fears over further Chinese monetary tightening.

Oil

Crude-oil futures rebounded Wednesday, halting six straight sessions of losses on a rise in prices for fuel products. Light, sweet crude oil for March delivery settled $1.14 higher at $87.33 a barrel on the New York Mercantile Exchange. Prices for the Nymex benchmark, West Texas Intermediate, were dragged higher by a surge in heating oil and gasoline futures. Both fuel contracts rose by more than 2% Wednesday despite an increase in weekly U.S. stockpiles of gasoline and a smaller-than-anticipated drop in distillates, which include heating oil and diesel. Gold futures got a slight bump after the U.S. Federal Reserve said it will continue its $600 billion Treasury buying program. The most-actively traded gold contract, for February delivery, was recently up $6.10, or 0.5%, at $1,338.40 a troy ounce in after-hours electronic activity on the Comex division of the New York Mercantile Exchange. Before the Fed announcement, February gold, as well as the thinly traded nearby January contract, had settled 70 cents higher at $1,333.