Shares rise on Greek debt hopes; U.S. yields rise

By Sam Forgione

NEW YORK (Reuters) – U.S. and European shares rose on Tuesday after press reports on the possibility of a debt agreement between Greece and its major creditors, while U.S. Treasury yields rose on continued expectations of a Federal Reserve rate hike this year.

Reports of a possible agreement between Greece and its international creditors, including an MNSI report that the EU Commission will propose a six-month debt extension, helped shares rebound ahead of a meeting of the bloc’s finance ministers Wednesday.

German Finance Minister Wolfgang Schaeuble, however, said if Greece did not want a new aid program, “then that’s it,” adding he expected to hear something binding from Athens on Wednesday. He denied reports Greece had come to an agreement with the Commission and said the ministers would not negotiate a new program for Athens when they meet.

U.S. shares were also helped by positive corporate earnings. Coca-Cola Co <KO.N> shares were one of the biggest boosts to the Dow and the S&P 500, climbing 3.3 percent to $ 42.59 after the company reported a bigger-than-expected profit and its first increase in North American sales, its biggest market, in four quarters.

“Anything that makes us believe we can avoid a sloppy Greek exit is going to be a positive for markets overall, and that is where we are at right now,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

U.S. Treasury yields rose, with benchmark 10-year note <US10YT=RR> yields surpassing 2 percent to their highest in a month on heightened expectations that the Fed, the U.S. central bank, would hike rates from rock-bottom lows this year after strong U.S. jobs data last Friday. Traders were also positioning ahead of big U.S. government bond auctions.

“We are still showing some of the hangover from the good nonfarm payrolls report on Friday,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

Oil prices slipped, ending a three-day rally, after the International Energy Agency warned of more selloffs in the near term as crude stocks continue to rise. Analysts polled by Reuters estimated U.S. commercial crude stockpiles likely rose 3.8 million barrels to a record high last week.

The Dow Jones industrial average <.DJI> was last up 0.44 percent at 17,806.88, the S&P 500 <.SPX> was up 0.51 percent at 2,057.22 and the Nasdaq Composite <.IXIC> was up 0.73 percent at 4,760.70.

In Europe, the FTSEurofirst 300 index <.FTEU3> of top regional shares was up 0.52 percent at 1,487.76. MSCI’s all-country world stock index <.MIWD00000PUS> was up 0.19 percent to 419.67.

The rise in Treasury yields helped the U.S. dollar hit a one-month peak against the safe-haven Japanese yen <JPY=EBS> of 119.61 yen. The dollar index <.DXY>, which tracks the greenback versus a basket of six currencies, was last up 0.27 percent, at 94.704.

Data overnight showing Chinese inflation fell to a five-year low provided support for expectations of further policy easing by Beijing to protect growth. Shanghai shares rose more than 1 percent but stocks in the rest of Asia declined.

Brent crude <LCOc1> was last down $ 1.52 at $ 56.82 a barrel. U.S. crude <CLc1> was last down $ 2.22 at $ 50.64.

The uptick in the dollar led gold to stall the previous day’s rise, preventing a steeper recovery from Friday’s three-week low. Spot gold prices <XAU=> were last down $ 1.83 at$ 1,237.10 an ounce.

(Reporting by Sam Forgione; Additional reporting by Marc Jones in London and Chuck Mikolajczak and Michael Connor in New York; Editing by James Dalgleish)