Rebound in commodities carries stocks higher

       A rebound in commodities is drawing investors back into the stock market.
       Major stock indicators rebounded Tuesday from a drop the day earlier. The Dow Jones industrials rose 51 points after losing 41 on Monday.
       In an about-face, the dollar weakened against other major currencies and commodities like oil and gold bounded higher, lifting energy and mater ial stocks. Financial stocks also rose sharply.
       The gains came as the Federal Reserve began a twoday meeting on interest rates. Investors are hoping the Fed will provide a clearer indication of when it may raise rates when it issues a statement at the conclusion of the meeting yesterday.
       The Fed is widely expected to keep rates at their record low of near zero for the time being. Rockbottom interest rates have helped fuel the market's nearly seven-month old ra lly, making cash plentiful and cheap and encouraging investors to buy up riskier assets.
       The market appears to be following a well-established pattern where brief selloffs are met with more buying as investors fear missing out on a continued rally.
       "Reluctantly, investors are continually being dragged into a market that is finding a path of least resistance to the upside," said Art Hogan, chief market analyst at Jefferies & Co.
       The consensus on Wall Street is that the economy is healing despite ongoing challenges like unemployment. But investors still have doubts over how strong the recover y will be, and whether the stock market's more than 50% move off of 12-year lows in Marc h accurately reflects the still fragile state of the economy.
       "Right now, it's a more orderly market," said Greg Reynholds, senior vice president of asset management at Lenox Advisors. "People are digesting the data, trying to figure out exactly where we're headed."
       The Dow Jones industrial average ro se 51.01, or 0.5%, to 9,829.87. The Standard & Poor's 500 index gained 7.00, or 0.7%, to 1,071.66, while the Nasdaq composite index rose 8.26, or 0.4%, to 2,146.30.
       More than two stocks rose every one that fell on the New York Stock Exchange, where volume came to 1.3 billion shares compared with 1.2 billion Monday.
       In other trading, the Russell 2000 index of smaller companies rose 4.72, or 0.8%, to 620.69.
       Gold and silver prices rose after three days of drops,while oil prices gained $1.69 to $71.40 a barrel on the New York Mercantile Exchange.
       Commodities rose as the US dollar index, which measures the greenback against a basket of foreign currencies, fell 0.8%, after earlier hitting a fresh low for the year. The dollar has fallen sharply since early March,making commodities cheaper for foreign investors, as its appeal wanes amid low interest rates and unprecedented government spending designed to stimulate the economy.
       Demand for energy and material stocks increased as commodities rose. US Steel Corp added $2.22, or 4.6%, to $50.24, while Chesapeake Energy Corp jumped $1, or 3.6%, to $29.11.
       Financial stocks were mostly higher after Rochdale Securities analyst Richard Bove raised his target price on Bank of America Corp to $25 a share. Shares of the Charlotte, NC-based bank rose 36 cents, or 2.1%, to $17.61.
       Among technology stocks, Google In c. shares hit a 13-month high after a Canaccord Adams analyst raised the target price on the stock to $560. Shares rose as high as $501.99 and ended at $499.06, a gain of $2.06.
       In economic news Tuesday, a government index showed US home pr ices r ose 0.3% in July from the previous month. The index is still 4.2% below last year's levels.
       After soaring 50.1% since hitting a 12-year low in early March, the Dow stands 170 points below the 10,000 mark _a level the average first crossed in March 1999 and hasn't been above since October.
       Bond prices rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.45% from 3.49% late Monday. AP
       LONDON 5,142.60 +8.24
       European shares closed higher on Tuesday, snapping a two-day losing streak as a stronger commodity sector tracked firmer crude and metals prices that were supported by a weaker dollar.
       Britain's top share index edged higher as miners and oil stocks buoyed by firmer commodity pr ices lent support, though with investors nervous before the Group of 20 leaders' meeting at the end of the week.
       The FTSE 100 closed at 5,142.6 points, up 8.24 or 0.16%.
       In Frankfurt, the DAX index ended at 5,709.38 points,up 40.73 or 0.72%.
       In Paris, the CAC-40 index closed at 3,823.52 points,up 11.36 or 0.30%.
       The pan-European FTSEurofirst 300 index of top shares closed up 0.5% at 1,004.41 points. The European index has rallied nearly 56% since hitting a low in March and is up around 18% this quarter, on track to post its best quarterly rise in almost a decade.
       "A fairly positive tone to the day. I think it is a general notion that the recession is ov er and the economy is only going to improve from here," said Peter Dixon, economist at Commerzbank.
       US Treasury Secretary Timothy Geithner said the US economy appeared to be gathering steam and G20 leaders meeting in Pittsburgh this week would strive to ensure the recovery was balanced.
       'But there is a growing sense we are getting a bit ahead of ourselves. We have had a pause in recent days ... and I expect the trend over the next few days is going to be flat," Dixon said.
       Energy stocks added most points to the index as oil rose above $71 a barrel, recovering from a sharp fall the previous day. BP, Royal Dutch Shell and Total were 0.7 to 0.9% higher. Miners tracked metals prices higher, with copper and nickel up 1.6 and 3.9%, respectively.
       Eurasian Natural Resources Corporation, Rio Tinto and Xstrata rose between 1.1 to 4.4%. Drugmakers,which have lagged behind the rally and offer relatively higher and steadier yields, were also in demand.
       Roche gained 1.4% after Phase II data showed that Avastin, which has already been shown to help patients with brain cancer stay alive longer without their condition worsening, may also improve their daily lives.
       Banks found favour, with Credit Suisse gaining nearly 3%. The Swiss group is confident it can keep private banking margins between 110 to 120 basis points over the long term and expects average annual net new money growth of 6%.
       Banco Santander, Credit Agr icole and Deutsche Bank were up 0.7 to 1.7%. Looking ahead, investors will look closely at the outcome of the two-day Federal Reserve policy meeting which ends yesterday.
       Economists expect the FOMC to hold the target range for interest rates steady at zero to 0.25%.
       With steering the global economy out of recession the key focus for the G20 leaders meeting in Pittsburgh today and Friday, markets will be looking for any comment indicating the Fed might wind back its stimulus measures given improving macroeconomic data.
       "The issue of exit strategies is likely to remain key for policymakers globally, at this week's G20 summit and beyond. It is the outlook for subdued inflation that gives the necessary breathing space for policy support to be withdrawn cautiously," Barclays Wealth said in a note.