Stocks, commodities gain in world markets overnight

US house prices declined 5.5 per cent in the first quarter, the biggest slide in two years. Photo / Thinkstock

Stocks gained in the US and Europe as prices of commodities gained, overshadowing weaker-than-expected American durable goods and house prices.

The Dow Jones Industrial Average was 0.3 per cent higher at 12398.78 in afternoon trading. The Standard & Poor's 500 Index rose 0.4 per cent to 1321.32 and the Nasdaq Composite rose 0.7 per cent to 2764.19.

Oil companies Exxon Mobil and Chevron both rose 1.2 per cent as the price of crude oil gained. Aluminium producer Alcoa climbed 1.2 per cent and EI du Pont rose 1.8 per cent.

Crude oil rose after US Energy Department figures showed petrol stockpiles rose by 3.79 million barrels to 209.7 million last week, the biggest gain since February. Distillate fuel stockpiles fell by 2.04 million barrels to 141.1 million.

Crude oil for July delivery climbed 1.7 per cent to US$ 101.29 a barrel on the New York Mercantile Exchange. The price of crude has soared almost 50 per cent this year.

Freeport- McMoRan Copper & Gold gained rose 3.2 per cent as the price of copper rose.

"The rally in stocks and commodities reflects the view that the global economic recovery is in place," Eric Teal, chief investment officer at First Citizens Bancshares, told Bloomberg.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials climbed 1.4 per cent.

Durable goods orders fell a greater-than-expected 3.6 per cent in April, according to the US Commerce Department.

US house prices declined 5.5 per cent in the first quarter, the biggest slide in two years. The first-quarter drop followed a 2.5 per cent decline in the fourth quarter last year, according to the Federal Housing Finance Agency.

American International Group fell almost 5 per cent after the Treasury sold 200 million shares at a slight discount to its prevailing market price.

Gold rose for a fourth day as investors continued to buy the precious metal as a haven from Europe's debt crisis.

Gold futures for August delivery edged up 0.2 per cent to US$1,527.80 an ounce in New York. Gold reached a record US$1,577.40 on May 2.

In Europe, French Finance Minister Christine Lagarde confirmed she is seeking to be the head of the International Monetary Fund.

She defended her record and said it shouldn't matter that she is European.

There has been criticism from some nations that an appointment should be made outside of the region to replace Dominique Strauss- Kahn, who resigned to face sexual assault charges in New York.

Germany's DAX 30 and France's CAC 40 climbed 0.3 per cent and the U.K.'s FTSE 100 Index rose 0.2 per cent. Banks in the region rose on optimism some will pass stress tests unscathed. Germany's Commerzbank surged 6.1 per cent.

The euro weakened to $1.4096 from $1.41.

US Treasuries pared earlier losses after investors hoovered up US$35 billion of five-year notes offered in an auction. Demand was the strongest since 1994, according to Bloomberg.

The sale is the second of three this week that will pump out a total $99 billion of new debt. The notes drew a yield of 1.813 per cent, below the 1.83 per cent expected in a Bloomberg survey. The bid-to-cover ratio was 3.2 compared to 2.77 last month.