Morgan Stanley Gives World Stocks a Lift

Specialist Damen Watson, right, directs trading at his post on the floor of the New York Stock Exchange Tuesday, Oct. 20, 2009. (AP Photo/Richard Drew)

(AP)

European and U.S. stock markets rose modestly Wednesday after solid earnings from U.S. bank Morgan Stanley. The euro, meanwhile, broke above $1.50 for the first time in over a year as the dollar extended its retreat.

In Europe, the FTSE 100 of leading British shares closed up 14.45 points, or 0.3 percent, at 5,257.85 while France's CAC-40 rose 1.77 point, or 0.1 percent, at 3,873.22. Germany's DAX was 21.72 points, or 0.4 percent, higher at 5,833.49.

All three indexes had been over 1 percent lower in anticipation of another retreat on Wall Street. But the Dow Jones industrial average was 44.74 points, or 0.5 percent, higher at 10,086.22 around midday New York time, while the broader Standard & Poor's 500 index rose 6.75 points, or 0.6 percent, at 1,097.81.

Though Morgan Stanley noted that economic conditions remained tough, investors were relieved that they managed to report third-quarter profits that were better than expectations. They were particularly impressed with Morgan Stanley's return to profit in the third-quarter and bid the stock up around 5 percent in early trade.

"The Morgan Stanley figures seem to have cheered investors and given a little bit of impetus to the markets," said Keith Bowman, an equity analyst at Hargreaves Lansdown stockbrokers in London.

It wasn't all good news on the U.S. earnings front, however. Boeing reported a $1.6 billion loss in the third quarter as charges from its delayed 787 and revamped 747 aircraft took their toll. Those charges also forced the airplane maker to slash this year's profit forecast. Shares in the company were down around 1 percent in early trade.

Boeing's loss provided investors a clear illustration of the difficulties still swirling around the U.S. economy in the wake of disappointing housing figures Tuesday.

The rally in stocks since March's lows have been predicated on hopes that the global economic recovery will be quicker and more substantial than valuations were implying. So far, most U.S. companies have reported better-than-expected earnings and painted a fairly rosy picture for the coming months, helping major indexes push back above the levels they were over a year ago before Lehman Brothers collapsed.