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Wednesday, December 7, 2016

By Sinead Carew

NEW YORK (Reuters) — Wall Street advanced while European shares and commodities fell on Wednesday as investors balanced strong U.S. economic data with fears about China’s slowing economy.

The benchmark S&P 500 was up 1.2 percent in midday trading, off its earlier highs, helped by stronger-than-expected data on durable goods orders and policy comments.

Europe’s FTSEurofirst 300 index of major companies (FTEU3) closed down 1.6 percent after a choppy trading day. China’s key share indexes ended down after attempts to move higher were slapped back by waves of selling several times, reflecting hopes for more government and central bank support.

The Shanghai Composite Index (SSEC) ended down 1.3 percent, its fifth straight day in the red as Beijing also dished out another round of trading bans.

“Everybody’s just on guard and aware of the potential for greater volatility than we’ve seen in quite a while. We’ve seen investors dip their toes and buy high-quality names they like that they can get cheaper,” said Brian Fenske, head of sales trading at ITG in New York. He added, “You could call me two hours from now and we could be down.”

At 11:42 a.m., the Dow Jones industrial average (DJI) was up 188.66 points, or 1.2 percent, at 15,855.1, the S&P 500 (SPX) gained 21.95 points, or 1.18 percent, to 1,889.56 and the Nasdaq Composite (IXIC) added 50.78 points, or 1.13 percent, to 4,557.26.

U.S. stocks had slumped in the last hour of a volatile session on Tuesday as investors looked to avoid overnight exposure.

The CBOE Market Volatility Index (VIX) was still elevated at 34, indicating significant uncertainty, but the “fear index” was well below Monday’s 6-1/2 year peak of 53.3.

Most U.S. Treasuries prices turned positive on Wednesday, erasing earlier losses, after New York Federal Reserve President William Dudley said a U.S. Federal Reserve September rate hike seems less compelling than a few weeks ago in the wake of recent global market turmoil.

The dollar index (DXY), which measures the greenback against a basket of major currencies, fell after the comments but was up 0.3 percent later in the morning.

Despite China’s struggles, Asia markets had some bright spots. Japan’s Nikkei (N225) saw a 3.2 percent jump and Korea’s KOSPI (KS11) showed its biggest jump in two years with a 2.6 percent increase.

Oil prices were hurt by a bigger than expected increase in U.S. gasoline stocks, compounding negative sentiment from worldwide equities that pushed fuel prices to 6-1/2-year lows.

Brent crude futures (LCOc1) were last down 0.4 percent at $43.04 per barrel, while U.S. crude (CLc1) was down 0.7 percent at $39.05.

Copper (CMCU3), often considered a proxy for Chinese and global economic activity, was down 2.7 percent tumble while prices of gold (XAU=), traditionally a safe-haven asset, were off 1.5 percent.

(Additional reporting by Sujata Rao in London, Saikat Chatterjee in Hong Kong; Editing by Giles Elgood and Nick Zieminski)

Photo: Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York August 26, 2015. REUTERS/Lucas Jackson