US stocks surge as oil drops, steel earnings surge

US stocks surge as oil drops, steel earnings surgeNew York - Major US stock indices rallied on Tuesday, led by surging steel profits, lower oil prices and a jump in financial stocks despite some worrying new housing data.

US Steel Corp, the second-largest US steel producer, climbed 14 per cent after more than doubling its profits in the second quarter of the year. An index of steelmakers jumped by the most since 2002, according to Bloomberg financial news.

Crude oil fell more than 2.50 dollars to 122.19 dollars per barrel in New York, part of a weeks-long drop since topping 140 dollars per barrel in early July.

A financial stocks index jumped 7.5 per cent after Merrill Lynch sold 8.5 billion dollars in stocks to raise capital, as it struggles to recover from the ongoing US credit crisis.

Merrill also reported 4.4 billion dollars in fresh writedowns in conjunction with a sale of 30 billion dollars in mortgage-related bonds for about a fifth of their worth.

Consumer confidence inched upwards in the United States in July, recovering slightly from a 16-year-low a month earlier. The Conference Board said its index of consumer's expectations climbed to 51.9 in July from 51 in June.

The S&P/Case-Shiller index of home prices in the 20 largest metropolitan cities reported a record drop of 15.8 per cent in May from the same month in 2007, suggesting there is no end to the housing crisis in sight.

The blue-chip Dow Jones Industrial Average jumped 266.48 points, or 2.39 per cent, to 11,397.56. The broader Standard & Poor's 500 Index was up 28.83 points, or 2.34 per cent, to 1,263.20. The technology-heavy Nasdaq Composite Index rose 55.40 points, or 2.45 per cent, to 2,319.62.

The dollar climbed to 64.15 euro cents from 63.52 euro cents on Tuesday and to 108.09 Japanese yen from 107.43 yen.

Gold fell 11.40 dollars to 926.40 dollars per fine ounce. (dpa)

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