Stocks up again despite SocGen shock

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LONDON (Reuters) - Global stocks posted fresh gains on Friday, shrugging off an astounding $7 billion fraud at French bank Societe Generale, while commodities rallied as a U.S. tax stimulus package helped ease recession fears.

By Sujata Rao

LONDON (Reuters) - Global stocks posted fresh gains on Friday, shrugging off an astounding $7 billion fraud at French bank Societe Generale, while commodities rallied as a U.S. tax stimulus package helped ease recession fears.

Healthy U.S. jobs data and the chance of another Federal Reserve rate cut next week also stemmed the past week's flight to safe-haven assets such as U.S. Treasuries, and fuelled gains in stocks, emerging markets and high-yield currencies.

A $150 billion package of tax rebates and business incentives, aimed at warding off a recession in the world's largest economy, was agreed on Thursday by President George W. Bush and Congressional leaders.

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Fears of a recession had led to hefty drops on world stocks, some of which saw the worst losses since Sept 11 2001, but the swift agreement on Thursday gave investors confidence, as did the weekly U.S. jobless claims, which fell to a four-month low.

Buyers of banking stocks, which had suffered most during the recent equity market rout, were not deterred by news of a rogue trader scandal that will make a $7.16 billion dent in earnings at Societe Generale <SOGN.PA>.

"The Societe Generale situation is providing a rationale for the stock fall earlier in the week. People can see what caused it which is giving the market some comfort and is the reason for the bounce in the market," said Adam Cole, global head of FX currency strategy at RBC Capital Markets in London.

The FTSEurofirst 300 index of top European shares <.FTEU> bounced 1.9 percent, adding to a 5.4 percent leap on Thursday, Germany's DAX rose one percent <.GDAXI> while Britain's FTSE and France's CAC-40 <.FCHI> jumped 1.6 percent.

Top gainers included the Royal Bank of Scotland <RBS.L>, up 2 percent, and BP <BP.L> rising 2.2 percent, while Socgen shares rebounded 2.6 percent.

"Unlike previous mortgage-related writedowns by big banks, this one is not a structural loss," said Kim Jeong-hwan, a strategist at Woori Investment & Securities in Seoul.

"What investors are most fearful is uncertainty, rather than an accidental loss the size of which has been already identified, albeit huge."

Earlier Tokyo's Nikkei <.N225> ended up 4.1 percent -- its biggest daily percentage gain since March 2002. U.S. stock futures pointed to modest gains on Wall Street later after New York indices closed Thursday 1-2 percent higher.

Emerging stocks gained almost 3 percent <.MSCIEF>.

NO ONE WAY BET

But market players say coming sessions will not be a one-way street for markets. Worries linger about the extent of banks' losses from U.S. subprime mortgage securities ahead of earnings announcements by European financial institutions next month.

"We expect sharp gains and losses in the next few days and weeks," said Heinz-Gerd Sonnenschei, strategist at Postbank in Bonn. "The U.S. has done many things to stabilize the market such as the Fed rate cut, the stimulus package and help for monoline insurers but all the bad news is not yet out there."

Growth-sensitive oil and metals rallied, with crude above $90 a barrel at a three-day high.

A leading think-tank predicted Chinese economic growth would slow only slightly in 2008 to 10.8 percent -- key as the country's double-digit growth has been a driving force behind this decade's oil and metals price rises.

Copper rose 2 percent, while spot gold and platinum hit record highs, helped by news that power shortages had forced South Africa's leading gold producers to suspend output.

Gold traded at $919.80 an ounce and platinum set a record $1640 an ounce.

The yen came under pressure, falling 0.2 percent against the euro while the dollar gained 0.4 percent versus the yen, recovering from a recent 2-1/2 year low <JPY=>.

Japanese government bond futures had their sharpest fall in a 1-1/2 years as surging Tokyo stocks prompted investors to dump debt. The benchmark 10-year Japanese bond yield jumped 9.5 basis points to 1.480 percent.

But U.S. Treasuries steadied in Asia after witnessing the biggest selloff in nearly four years on Thursday in New York. Ten-year notes were bid up a third of a point to yield 3.6720 percent versus 3.711 percent in New York trade.

Yields had fallen to around 3.45 percent earlier this week and analysts stressed the jitters were not over yet.

(Reporting by Sujata Rao, editing by Mike Peacock)