Oil Deal Optimism Fuels Rally in Crude, Global Stocks

 

After a surprise agreement deal between non-OPEC Russia and the group's leader Saudi Arabia to freeze output at January levels, Iran stopped short of offering to hold back output as it wants to recoup market share it lost during years of sanctions.

 

Brent LCOc1 gained 7.6 percent at $34.64 and U.S. crude CLc1 was up 6.5 percent at $30.92 a barrel.

 

Energy shares .SPNY, up 3.2 percent, and materials .SPLRCM, up 2.2 percent, led Wall Street higher, with nine of the 10 major S&P sectors in positive territory.

 

"Clearly with this news of some potential coordinated pullback in production in global markets, we are beginning to get some visibility on the prospect of a range in crude oil," said Peter Kenny, equity market strategist at Kenny & Co LLC in Denver.

 

"Really investors want as much visibility and as few surprises as possible and this delivers on that, this takes the surprise out."

 

The Dow Jones industrial average .DJI rose 253.35 points, or 1.56 percent, to 16,449.76, the S&P 500 .SPX gained 31.6 points, or 1.67 percent, to 1,927.18 and the Nasdaq Composite .IXIC added 94.25 points, or 2.12 percent, to 4,530.20.

 

The S&P 500 has gained more than 5 percent since closing at its lowest level since February 2014 on Thursday, and is on track for its best three-day run since August.

 

The Mexican peso MXN= firmed 3.5 percent against the dollar after its central bank unexpectedly raised its benchmark interest rate by 50 basis points to 3.75 percent and intervened directly in the foreign exchange market to sell dollars as part of an aggressive new program in a major policy shift to support the peso.

 

Markets were awaiting minutes of the Federal Reserve's last meeting to judge views of policymakers on the prospect of further interest rate hikes.

 

Economic data showed U.S. housing starts unexpectedly fell in January but producer prices rose last month, with signs of an uptick in underlying inflation, which is closely watched for signs the Fed will raise rates.

 

In Europe, banks and resource stocks helped fuel a rally, with French bank Credit Agricole (XCA.F) (CAGR.PA) and UK-listed miner Glencore (GLCNF) (GLEN.L) leading the move higher.

 

The pan-European FTSEurofirst 300 .FTEU3 index of leading shares closed up 2.7 percent, bringing its gains for this week to over 5 percent, leaving it on track for its best week in over five years.

 

Financials in Europe were up 3.3 percent .SX7P and basic resources stocks surged 8.1 percent .SXPP.

 

MSCI's index of world shares .MIWD00000PUS was up 1.56 percent, extending Tuesday's rise of 2.3 percent, its second-biggest gain in four years.

 

The dollar was up 0.11 percent against the yen JPY= to 114.19 yen while the benchmark 10-year U.S. Treasury US10YT=RR was down 17/32 in price at 1.8347 percent US10YT=RR.