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By Jennifer Yousfi
The U.S. markets had strong gains in early morning trading as financial stocks rallied on hopes that the subprime crisis might finally be reaching its bottom.
At midday, the blue-chip Dow Jones Industrial Average Index had posted a gain of 256.64 points (2.09%), to trade at 12,519.53. The tech-laden Nasdaq Composite Index increased 52.34 points (2.30%), to reach 2,331.44. And the broader Standard & Poor's 500 Index rose 27.73 points (2.10%), to hit 1,350.43.
All sectors were up with the financial sector (up 3.81%), the services sector (up 2.53%) and the technology sector (up 2.50%) posting the biggest gains.
Shares of Lehman Brothers Holdings Inc. (LEH) were up over 10% after the firm announced it would offer $4 billion in convertible preferred stock. Investor response to Lehman's offering has been overwhelmingly positive.
"It's three times oversubscribed; people are interested in investing in Lehman," Art Hogan, chief market strategist at Jefferies & Co., told MarketWatch.
UBS AG (UBS) also announced it would try to raise additional capital and despite estimating a $19 billion first quarter loss, U.S.-listed and European-listed shares rose.
"To the extent the market is comfortable that they're able to add to their capital base, it means we are working our way through these problems," Alan Gayle, senior investment strategist at RidgeWorth Capital Management Inc., which oversees about $74 billion in Richmond, Virginia, told Bloomberg News. "There's hope we're seeing the end of the write-offs."
In overseas markets, Japan's Nikkei Index reversed about half of yesterday's losses with a 1% gain, adding 130.88 points to close at 12,656.42. Hong Kong's blue-chip Hang Seng Index gained 288.26 points, to close at 23,137.46.
At midday, the dollar had gained ground against the euro (up 1.084%), the yen (up 2.878%) and the pound sterling (up 0.805%).
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