Wall Street climbs after 2-day loss; euro rallies

Shares on Wall Street rose on Friday after two days of losses as focus returned to better-than-expected first-quarter earnings in the United States and the euro and commodities gained on reduced worries over Spain's debt burden.

U.S. Treasuries prices slid as traders pulled back from the recent rush into safe-havens. Some were also squaring positions as a cautionary step ahead of the French elections and next week's gatherings of key policymakers, including the U.S. Federal Reserve.

On Wall Street, the S&P 500 was up half a per cent at midday and headed for a 1.2 per cent gain on the week, its first weekly gain in three weeks. That followed strong first-quarter results from fast-food chain McDonald's, software giant Microsoft and top U.S. conglomerate General Electric Co.

Of the 121 S&P 500 components reporting through Friday morning, 81 per cent beat expectations, according to Thomson Reuters data.

"It continues to be another good earnings season," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"They are good signs the U.S. economy remains on track, it's not super growth, but it's growth."

At noon, the Dow Jones industrial average was up 105.09 points, or 0.81 per cent, at 13,069.19. The Standard & Poor's 500 Index was up 8.62 points, or 0.63 per cent, at 1,385.54. The Nasdaq Composite Index was up 18.65 points, or 0.62 per cent, at 3,026.21.

Some, however, cautioned that there had been no clear break in the push-and-pull exerted on the market over the past week by macroeconomic forces.

"We are seeing this constant struggle, and we are at the same point as the last two years come the spring, where you see earnings continue to be positive," said Michael Gault, senior portfolio strategist at WeiserMazars Wealth Advisory in New York.

"Some of the macroeconomic pressures (are) really fighting back what corporate earnings are doing and indicating in terms of the status of the recovery."

While Spain was not the foremost thing on investors' minds as in the last two days, underlying concerns about Madrid's budget deficit, banking sector and poor growth outlook were real and constant, analysts said.

Many worry that if Spain's bond yields rise to 7 per cent and beyond, it could make the country's borrowing costs unaffordable. Ten-year government bond yields in Spain topped 6 percent for a third time this week after a debt auction on Thursday fell short of market expectations.

The creeping Spanish yields should keep the euro constrained within the $1.30-$1.32 range, currency traders said.

The euro was last at $1.3213 in New York trading, having hit a session high of $1.3224. A firm break below $1.30 would eventually open the door to a test of the single currency's 2012 low at $1.2624, traders said.

A small respite from the worries over Spain and the euro zone came from the Ifo survey of German business sentiment, which unexpectedly rose for the sixth month running.

The benchmark 10-year U.S. Treasury note was down 4/32, its yield at 1.9823 per cent.

Demand for U.S. government bonds softened ahead of the first round of French elections on Sunday; the semiannual meetings of the International Monetary Fund and the World Bank in Washington; and the Fed's policy meeting next week.

European stocks gained 0.4 per cent, while world equities climbed 0.5 per cent.

On the commodities side, benchmark Brent crude oil in London was up nearly 1 per cent at above $118 a barrel, paring gains from an earlier high above $119.