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By Herbert Lash
NEW YORK (Reuters) - The euro rebounded to a two-month high and global stocks edged higher on Wednesday as blow-out results from top chip maker Intel offset revived fears of a stalled recovery after weak U.S. retail sales for June.
Markets were choppy as the prospect of strong corporate results ran into fresh signs that economic growth looks sluggish at best.
European shares snapped a six-day winning run, with banks sliding on worries that tough new capital and risk rules will be imposed on the sector.
But Wall Street nosed higher, led by technology stocks, after Intel Corp late on Tuesday posted forecast-beating quarterly earnings and revenue that allayed fears of a technology spending slowdown.
"It continues to be corporations ... that are driving the economic recovery," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
Regarding the poor retail sales data, Ghriskey said: "The consumer can be very fickle and very subject to short-term fears."
Sales at U.S. retailers fell for a second straight month in June as weak receipts at automotive dealers and gasoline stations provided further evidence the U.S. recovery has slowed in recent months from an already-modest pace.
Global shares measured by MSCI's all-country world index rose almost 0.6 percent.
At 12:30 p.m. the Dow Jones industrial average was up 16.72 points, or 0.16 percent, at 10,379.74. The Standard & Poor's 500 Index was up 2.23 points, or 0.20 percent, at 1,097.57. The Nasdaq Composite Index was up 15.86 points, or 0.71 percent, at 2,257.89.
The FTSEurofirst 300 of top European shares fell less than 0.1 percent to close at 1,045.11 points.
Tech stocks helped limit losses, after Dutch chip equipment maker ASML hiked its sales outlook for 2010 and following Intel's results.
The strong U.S. corporate earnings encouraged investors to seek higher-yielding, higher-risk currencies and assets, lifting the euro and triggering a bevy of automatic buy orders that pushed the euro above $1.2770, its highest level since early May.
The euro was up 0.32 percent at $1.2767.
The dollar was down against a basket of major currencies, with the U.S. Dollar Index down 0.47 percent at 83.252.
Against the yen, the dollar was down 0.18 percent at 88.51.
Talk of a possible debt downgrade for Spain, heightened by a surge in borrowing by Spanish banks from the European Central Bank in June to a new record high, also eroded risk appetite and drove up the price of safe-haven assets like debt.
On Tuesday, Moody's cut Portugal's debt rating by two notches, adding to unease about debt levels in several euro zone countries.
Bund futures and U.S. Treasuries rose. The benchmark 10-year U.S. Treasury note was up 5/32 in price to yield 3.10 percent. September Bund futures rose to a session high of 129.09 before paring gains.
Investors looked ahead to a Federal Reserve outlook on the U.S. economy later on Wednesday, and to the release of minutes from its most recent monetary policy meeting. The Fed's statement is expected to reinforce the view economic recovery is faltering.
"If the Fed declares that growth will be marked down and we won't be roaring into recovery in the second half of the year, that's going to dampen enthusiasm," said Edward Riley, chief executive of Riley Asset Management in Boston.
Reuters polls of more than 600 economists showed on Wednesday that the world economy will cool a bit in the next few months as powerhouses China and the United States gear down and governments attempt to dam rivers of red ink.
Oil rebounded to above $77 a barrel as crude stocks fell a more than expected 5.06 million barrels.
U.S. crude rose 55 cents to $77.70. Brent crude gained 69 cents to $77.34.
Spot gold prices fell $3.25 to $1,207.40 an ounce.
Earlier in Asia, stocks rose to a three-week high. Japan's Nikkei average surged 2.7 percent to its highest close in three weeks, while the MSCI ex-Japan share index was up 1.4 percent.
(Editing by Leslie Adler)
(For more news on Reuters India, click http://in.reuters.com)
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