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NEW YORK (Reuters) - World stocks rallied and oil prices fell on Friday after Egyptian President Hosni Mubarak stepped down, bowing to escalating pressure from the military and protesters.Prices of gold and U.S. Treasury bonds partly erased early gains as Mubarak's departure partially revived investors' appetite for risk. The U.S. dollar briefly pared gains, but remained strong against a basket of major currencies.
"It looks like the stock market is taking the news well," said Gary Thayer, chief macro strategist with Wells Fargo in St. Louis.
"One thing that has weighed on investor sentiment is that the price of oil would go up in the case of political turmoil, and Mubarak's leaving reduces that possibility."
Key U.S. stock indexes opened lower on concerns about the continuous unrest in Egypt, a longtime U.S. ally in the Middle East. On Thursday, Mubarak disappointed protesters and investors by holding on to power.
Equities rose later as news of his resignation was announced by the Egyptian vice president on television.
The Dow Jones industrial average .DJI was up 15.67 points, or 0.13 percent, at 12,244.96, while the Standard & Poor's 500 Index .SPX gained 3.39 points, or 0.26 percent, to 1,325.26. The Nasdaq Composite Index .IXIC added 5.29 points, or 0.19 percent, at 2,795.74.
In Europe, the FTSEurofirst 300 .FTEU3 index of top shares gained 0.5 percent. MSCI's benchmark All-Country World Index .MIWD00000PUS rose 0.18 percent.
U.S. crude oil prices fell 30 cents, or 0.35 percent, to $86.43 per barrel, while spot gold prices erased part of its gains, but were still up 0.19 percent at $1,364.00.
U.S. Treasury prices also shed some gains, but the benchmark 10-year notes were still up 22/32 in price, with the yield at 3.6194 percen