GLOBAL MARKETS-US, world stocks rise; oil ends higher

* China growth data, French rating threat weigh* Government bonds down; dollar, euro near flat (Updates prices, adds crude futures close)By Caroline ValetkevitchNEW YORK, Oct 18 (Reuters) - World stocks turned higher and the S&P 500 jumped 2 percent on Tuesday, lifted by a rise in financial shares on earnings results from Bank of America (BAC.N) and other big banks, while oil prices rebounded.Slower-than-expected Chinese growth and a warning by Moody’s to France over risks to maintaining its top credit rating drove worries about a weaker global economy, weighing on oil and world stock indexes earlier in the day.The U.S. benchmark Standard & Poor’s 500 index .SPX was up more than 2 percent. Shares of Bank of America, the second-largest U.S. bank by assets, bounced 11.6 percent to $6.73 after the bank reported a quarterly profit. Shares of Goldman Sachs (GS.N) rose 6.4 percent at $103.12 even after it reported a wider-than-expected quarterly loss.The KBW bank index .BKX rose 6.4 percent, its biggest daily percentage gain since Aug. 9.”There was some genuine panic the banks, the financials, were going to start reporting earnings that were going to just undermine any shred of confidence and any kind of sustainable rebound. And, really, the earnings haven’t done that,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.The Dow Jones industrial average .DJI unofficially closed up 179.67 points, or 1.58 percent, at 11,576.67. The Standard & Poor’s 500 Index .SPX unofficially closed up 24.39 points, or 2.03 percent, at 1,225.25. The Nasdaq Composite Index .IXIC unofficially closed up 42.51 points, or 1.63 percent, at 2,657.43.Robust U.S. profits have driven much of the U.S. stock market’s gains from the March 2009 lows, but investors have worried that corporations will be unable to sustain that profit growth in a sluggish global economic climate.S&P 500 financials earnings are expected to have increased just 3 percent from a year ago, while S&P 500 earnings as a whole are expected to have risen 13 percent, according to Thomson Reuters data.In Europe, however, bank shares fell sharply on Tuesday, with French banks among the worst hit after Moody’s warned on the outlook for France’s credit rating.Moody’s cautioned it may slap a negative outlook on France’s Aaa credit rating in the next three months if costs from helping to bail out banks and other euro zone members stretch its budget too thin. For details, see [ID:nN1E79G1VP]The FTSEurofirst 300 index .FTEU3 closed down 0.4 percent at 962.13 points. Shares of French banks Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA) and Credit Agricole (CAGR.PA) all lost between 3.3 percent and 5 percent.The MSCI world equity index .MIWD00000PUS was up 0.5 percent, reversing earlier losses following sharp gains in Wall Street stocks. The world index is still up more than 11 percent from a 15-month low earlier this month.Brent crude oil futures ended higher, lifted by Wall Street’s higher bank earnings and shrugging off the weak Chinese economic growth data.China’s economic growth in the third quarter slowed to its weakest pace since the 2009 second quarter. Growth eased to 9.1 percent in the July-September period at an annual rate, slightly below forecasts of 9.2 percent.The Moody’s warning on France compounded investor jitters after Germany’s finance minister on Monday warned that it was not realistic to expect a definitive solution to the euro zone debt crisis to be reached at a key European Union summit to be held on Sunday.On Tuesday, sources from her party quoted Germany’s chancellor Angela Merkel as saying she expects European leaders to produce a “work plan” for Greece at the summit, possibly including a permanent mission of international lenders to monitor its debts.”While some people are reconsidering their stance of an absolute worst-case scenario (on the global economy) and it’s a stance that we don’t necessarily agree with, for the most part the market still has a very cautious approach where people are not willing to go on a limb one way or the other,” said Tom Porcelli, chief economist at RBC Capital Markets in New York.In London, ICE Brent crude for December delivery LCOZ1 settled at $111.15 a barrel, gaining 99 cents, or 0.9 percent.U.S. Treasury prices turned lower late in the session.Benchmark 10-year Treasury prices US10YT=RR fell 9/32 in price to yield 2.19 percent compared with 2.18 percent late on Monday. Earlier, yields fell as low as 2.08 percent, their lowest since Oct. 7.Also, in European markets, the French/German 10-year government bond yield spread FR10YT=TWEB widened to a euro-era record of 101 basis points. French debt also underperformed that of the Netherlands, its triple-A rated peer.Apple Inc. is (AAPL.O) due to report results on Tuesday after the market close. Its shares were up 0.8 percent at $423.36.

GLOBAL MARKETS-Shares fall after China GDP, French warning

The spread between French and German 10-year government bond yields rose to a 16-year high after rating agency Moody’s said it may slap a negative outlook on France’s credit rating in the next three months. Concerns have been rising over the costs to Europe’s major economies if they have to bail out more banks or weaker euro zone members.China’s annual gross domestic product growth eased to 9.1 percent in July-September, slightly below forecasts of 9.2 percent, indicating the world’s second-largest economy expanded at its slowest pace since the second quarter of 2009.”Investors’ resolve is being tested quite considerably. The situation in Europe is still overhanging in a very large fashion and the Chinese data does add another tick in the box of worries for investors to digest,” said Keith Bowman, equity analyst at Hargreaves Lansdown.”The kind of backdrop we have got at the moment is creating ideal conditions for people to take profits.”MSCI world equity index fell 1 percent. The benchmark index is still up more than 11 percent after hitting a 15-month low earlier this month.European stocks fell 1.3 percent.Optimism over a key European Union summit on Oct. 23 waned after German Finance Minister Wolfgang Schaeuble said on Monday that even though European governments would adopt a five-point platform to address the crisis, a definitive solution would not be reached at the summit.”The nervousness is very high and negative comments will have a larger impact than positive comments. The balance of risk is we’re definitely going to see more positive performance in Bunds,” Nordea analyst Niels From said.Emerging stocks lost more than 2 percent.Investors are also eyeing corporate earnings. IBM reported third-quarter revenue that met forecasts, while lender Wells Fargo ‘s results fell short of expectations.Of the 45 companies in the S&P 500 that have reported earnings, 62 percent have beaten analyst expectations, according to Thomson Reuters data.VIX , Wall Street’s so-called fear gauge, rose 18.2 percent to 33.39 on Monday, its highest one-day jump since August.U.S. crude oil fell 0.4 percent to $86.03 a barrel.Bund futures gained 86 ticks. The French/German 10-year government bond yield spread widened to a euro era record of 101 basis points. French debt also underperformed its triple-A rated peer the Netherlands.The dollar gained 0.2 percent against a basket of major currencies.The euro fell 0.15 percent to $1.3710.

Senate comes closer to overhauling education law

President Barack Obama recently began allowing states to opt out of some of the requirements in the law passed nearly a decade ago, saying Congress had been too slow to reform it.Democrat Tom Harkin and Republican Mike Enzi, the two most powerful members of the Senate’s Education Committee, forged an agreement on a bill that would give states more freedom to set the courses for their school programs.”It will support teaching and learning rather than labeling and sanctioning, focus federal attention on turning around low-performing schools and closing achievement gaps, improve resource equity, and give states and schools the flexibility to innovate,” said Harkin, who chairs the committee, in a statement.The committee will take up the bill on Wednesday.Education Secretary Arne Duncan gave the compromise a lukewarm reception, praising it for providing flexibility “while maintaining accountability at every level.”“I believe, however, that a comprehensive evaluation system based on multiple measures, including student achievement, is essential for education reform to move forward,” Duncan said in a statement. “This view is shared by both national teacher unions and state leaders all across the country who are committed to doing a better job of preparing our young people for the global economy. We cannot retreat from reform.”No Child Left Behind was passed in Congress by both parties — in the Senate its chief champion was Democrat Edward Kennedy. When it was signed by President George W. Bush in 2002, it ushered in an era of setting learning standards and testing students.In September, Obama said states could apply for waivers from having to meet some of the standards set by the law, which expired four years ago and has been temporarily extended.The U.S. government provides only about 8 percent of schools’ funding but federal support has become more precious to school districts since the housing bust ravaged their primary source of revenue — property taxes.The Senate agreement would authorize grants to help local districts, improve school buildings, prepare students for college and support teacher development.Obama has recently suggested repairing school buildings to provide jobs for unemployed construction workers.The biggest educators’ union, the National Education Association, said it was pleased with the agreement, noting it “recognizes the federal government’s role is limited” in teacher evaluations.

Problems plague Apple iCloud, iOS launch

By Poornima Gupta and Jim FinkleSAN FRANCISCO, Oct 13 (Reuters) - Apple Inc rolled out its new iCloud service and latest mobile software to a chorus of user complaints this week, after glitches led to email access problems and long delays in installation.Some users reported losing their email access as Apple formally launched iCloud, an online communications, media storage and backup service, on Wednesday.Apple’s new operating system for the iPhone, iPad and iPod Touch — iOS 5 — also annoyed many users who encountered hours-long delays in downloading and installation.Investors have high hopes for iCloud, which replaces MobileMe, a collection of Web-based products that have failed to impress critics or generate substantial revenues for a company that has had success in most other ventures over the past decade.”It failed in a very nasty way in that mail sometimes vanished, sometimes appeared then vanished, and often there was a user and/or password-incorrect message plus some rather obscure additional error messages,” said David Farber, a professor of engineering and public policy with Carnegie Mellon University.”The behavior suggests program problems,” added Farber, a well-known computer scientist.But the iCloud problems are especially embarrassing for Apple, as the company introduced the new online service with much fanfare in June at its annual developer forum.Co-founder Steve Jobs, who died last Wednesday, said “it just works” when he introduced the service in June. The software is key to the new iPhone 4S, which will be launched on Friday in seven countries.The problems also come as rival Research in Motion deals with an international outage of its email and messaging services.”Some users were experiencing intermittent authentication errors when trying to use mail,” Apple said in a status update on its webpage for iCloud support. “Normal service has been restored. We apologize for any inconvenience.”Other problems Apple reported as having resolved included: intermittent slowness when signing in to iCloud, users unable to back up their data, and delays receiving verification emails from Apple.Apple spokespersons did not immediately return calls seeking comment.Users took to Twitter to complain about the problems during the roll-out.”iCloud would be great if the email would freaking recognize my password,” wrote Leanna Lofte, or “@llofte”, on Twitter.”Apple Mail’s still offline, everything’s out of sync here between my devices, and what a mess,” Matt Peckham, or “@mattpeckham”, wrote on Twitter.