Markets recover

As fears over Japan's difficulties with the Fukushima nuclear plant gradually recede, investors moved back into risk mode on Monday. Bloomberg reports:

Stocks climbed, sending benchmark gauges to their biggest three-day gains of the year, and the yen weakened as Japan made progress in cooling nuclear reactors at a crippled plant. Oil jumped after the U.S., U.K. and France attacked military targets in Libya.

The Standard & Poor’s 500 Index rose 1.5 percent at 4 p.m. in New York and the Stoxx Europe 600 Index closed up 1.8 percent. Telephone shares rallied as Deutsche Telekom AG agreed to sell T-Mobile USA to AT&T Inc. for about $39 billion. The yen fell versus all 16 major peers, while 10-year U.S. Treasury yields gained 6 basis points to 3.33 percent. Oil rose 1.2 percent as the S&P GSCI commodity index climbed a fourth day.

The S&P 500 recouped most of last week’s 1.9 percent loss as Japanese Prime Minister Naoto Kan said progress is being made in restoring power to two nuclear reactors damaged by the March 11 temblor and tsunami. In Libya, allied officials said air and missile strikes have effectively grounded Muammar Qaddafi’s air force. The Stoxx 600 Telecommunications Index had its biggest gain since May, jumping 3.7 percent as 20 of 21 shares advanced.

Ironically, US economic data on Monday were negative.

The Chicago Fed's National Activity Index fell in February.

The Chicago Fed National Activity Index ticked down to –0.04 in February from –0.01 in January. Three of the four broad categories of indicators that make up the index made positive contributions in February, but for the second consecutive month they were offset by continued weakness in the consumption and housing category.

The index’s three-month moving average, CFNAI-MA3, increased to +0.11 in February from +0.05 in January, coming in positive for two consecutive months for the first time since April and May of 2010. February’s CFNAI-MA3 suggests that growth in national economic activity was slightly above its historical trend. With regard to inflation, the CFNAI-MA3 indicates limited inflationary pressure from economic activity over the coming year.

And the US housing market continues to look weak. Bloomberg reports:

Sales of previously owned U.S. homes dropped more than forecast in February, sending prices to the lowest level since 2002 and indicating the market is struggling to recover.

Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price fell 5.2 percent from a year earlier.

There was somewhat better news on the UK property market. From Reuters:

Asking prices for houses in England and Wales are 0.9 percent higher than a year earlier, a monthly survey by property website Rightmove showed on Monday.

March's annual rate of growth in asking prices picked up from a reading of 0.3 percent in February. The month-on-month rate of growth, which is subject to seasonal volatility, slowed to 0.8 percent from February's four-month high of 3.1 percent.