Stocks rise as investors shrug off initial fears

New York: Japan's massive earthquake and devastating tsunami hit commodities prices on Friday, but equity investors threw off their initial fears as they reassessed damage to the world's third-largest economy.

Early in the session markets reeled as television images revealed the destruction in Japan's north east after the country's biggest earthquake on record.

But some viewed the market's reaction as having gone too far too fast, and that a rebuilding of Japan could be good for a wide range of markets.

"It's generally a mistake for people to be too reactive to a natural disaster like this," said Howard Ward, a fund manager at the Gamco Growth Fund.

Caterpillar and other heavy equipment makers saw their stocks rise, and gold turned higher after the US dollar weakened against the euro. Copper prices steadied by the close, recovering from an earlier three-month low.

Yen soars

The yen soared as the magnitude 8.9 quake spurred a safety bid. The Japanese currency could rise further next week if insurers scramble to raise cash by selling foreign assets, such as US government debt, a potential move bond investors also were monitoring. Japanese government bonds rose, benefiting from the initial rush out of equities.

US crude dipped below $100 before paring some losses. Japan is the world's third-largest energy consumer and imports almost all its energy needs.

MSCI's all-country world index of global stocks fell to a five-week low but then rose 0.2 per cent in late trade. Japanese equity futures fell 3.3 per cent, but some investors said shares may not suffer a deep slide because major cities and manufacturing facilities were not damaged.

The quake shut refineries and other industrial facilities in Japan, driving oil lower. North Sea Brent was poised to post a weekly loss for the first time in seven weeks, with US crude on track to end down for the first week in four.

The oil market also monitored a planned day of protests in top oil exporter Saudi Arabia and the violence in Libya, where oil exports have been disrupted.

European shares fell to a 2011 closing low, with insurers among the hardest hit, but US stocks rose, led by a 1.6 per cent gain in the S&P energy index and refining shares.

Wall Street was helped by a 1.0 per cent rise in US retail sales in February, the largest gain in four months, as shoppers stepped up purchases of autos, clothes and other goods even as they spent more for gasoline.

The Dow Jones industrial average closed up 59.79 points, or 0.50 per cent, at 12,044.40.

The Standard & Poor's 500 Index rose 9.17 points, or 0.71 per cent, at 1,304.28. The Nasdaq Composite Index added 14.59 points, or 0.54 per cent, at 2,715.61.

The dollar fell 1.2 per cent to 81.87 yen, its biggest one-day decline since December 3, while the yen also rallied against the euro, pound and Swiss franc.

Ten-year Japanese government bond futures edged up 0.07 point to 139.27 in after-hours trade after having surged 0.66 point during the regular session, while the 10-year yield fell 3 basis points to 1.270 per cent.