NEW YORK — Stocks advanced Wednesday, ending two days of declines, as a rally in oil prices boosted energy shares and Ireland’s central bank governor said the country may return to bond markets next year, easing concern that Europe’s debt crisis will worsen.
The Standard & Poor’s 500 advanced 0.4 percent to 1,218.71, recovering from a 0.8 percent loss. The Dow Jones industrial average climbed 10.29 points, or 0.1 percent, to 11,357.04.
Benchmark indexes reached two-year highs last week after the Federal Reserve expanded its program of asset purchases to stimulate growth, a tactic known as quantitative easing, or QE2.
“Currency traders have reversed bets on the sovereign- debt fears, and you see that translating into a weakening dollar and stronger equity markets,” said Michael James, a managing director at Wedbush Morgan Securities in Los Angeles. “Ireland’s been the focus of sovereign-debt concerns over the last weeks, but the market seems to be weathering those fears.”
Irish central bank Governor Patrick Honohan said he’s convinced the country will be able to return to bond markets in 2011 as the government steps up austerity measures to lower the budget deficit and restore investor confidence.
“There is no reason why Ireland shouldn’t be able to go back to bond markets next year,” Honohan, who also sits on the European Central Bank’s 22-member Governing Council, told Bloomberg Television in an interview in Dublin. “It takes time for markets to be reassured. It takes more than calming words from me or others.”
U.S. futures fell earlier as China’s central bank raised lenders’ reserve requirements as cash from October’s larger-than-forecast $27.1 billion trade surplus threatened to add to the risk of asset bubbles and accelerating inflation. The step came a day before the G20 nations meet in Seoul, South Korea, to tackle global imbalances.
“It’s a mix of issues — the European situation, China, there’s a little bit of backlash to QE2,” said Michael Nasto, senior trader at U.S. Global Investors in San Antonio. “People are waiting to find out what’s going to happen at the G20 meeting later this week.”
