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Tuesday, May 18, 2010

Global stocks rise on optimism over euro zone progress

Global stocks edged higher on Tuesday after a late rally on Wall Street and on cautious optimism that progress is being made on the euro zone rescue plan, but the euro itself remained under pressure.

Euro zone finance ministers said they hoped to clarify some technical and legal details of the 750 billion euro ($925 billion) rescue plan this week.

Spain and Portugal are also expected to outline measures to cut their budget deficits.

European stocks took heart, but the euro struggled to recover from Monday's four-year lows, and was little changed at $1.24.

Although the euro's sharp fall makes it ripe for a bounce, it is expected to stay under pressure over the longer term due to concerns that planned euro zone austerity measures will stunt European growth.

"In terms of levels, we expect to see a break lower. The fundamental story remains for the dollar to strengthen against the euro boths in terms of fundamentals and relative pricing on the money market," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen.

The pound also rose, hitting a day's high against the dollar at $1.4522 shortly after government data showed inflation jumped more than expected in April.

The U.S. Senate voted on Monday for the U.S. government to oppose International Monetary Fund bail-outs to countries unlikely to repay them, which added to the euro's woes.

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