By Herbert Lash
NEW YORK (Reuters) - Stocks worldwide jumped on Wednesday on hopes a resolution to Greece's debt saga appeared in hand, but U.S. stocks pared gains as enthusiasm waned after the prime minister urged Greeks to reject a bailout deal with international creditors.
Prime Minister Alexis Tsipras urged Greeks to vote 'no' in Sunday's referendum on the bailout in a defiant address that dispelled speculation he was dialing back on his position under mounting pressure.
A 'no' vote was not tantamount to a rejection of Europe or the euro, Tsipras said. Instead, it would step up pressure on creditors to give the country an economically viable agreement.
Major European stock indices earlier surged 2 percent or more, with Germany's DAX <.GDAXI> gaining more than 3 percent, after Tsipras told international creditors Athens could accept the bailout offer if some conditions were changed. Later he told Greeks to reject the deal in Sunday's referendum.
"People thought he was ready to throw in the towel, obviously that?s not going to be the case," said Robbert van Batenberg, director of market strategy at Societe Generale in New York.
"One line of thinking says with a 'no' vote in hand Tsipras can tell creditors that, 'Look, the people don't want this, the people want to protect their pensions. You got to give me a better deal.'"
The pan-European FTSEurofirst 300 index <.FTEU3> rose 1.6 percent to close at 1,533.80, while Germany's DAX gained 2.2 percent. MSCI's all-country equities world index <.MIWD00000PUS> rose 0.44 percent, paring gains that were double that. Its emerging markets index <.MSCIEF> retreated 0.13 percent.
Stocks on Wall Street also pared gains. The Dow Jones industrial average <.DJI> rose 106.76 points, or 0.61 percent, to 17,726.27. The S&P 500 <.SPX> gained 10.82 points, or 0.52 percent, to 2,073.93 and the Nasdaq Composite <.IXIC> added 19.84 points, or 0.4 percent, to 5,006.71.
The price of battered bonds from southern European countries rose, while safe-haven bonds such as U.S. Treasuries and German bunds fell. The euro was lower after Greece's default overnight on its International Monetary Fund loans weakened the single currency by about half a percent.
The benchmark 10-year Treasuries note
Yields on bonds issued by Italy, Spain and Portugal, the countries most vulnerable to contagion from Greece's debt crisis, all fell.
The dollar gained on news that U.S. private employers had ramped up their hiring in June, a further sign of an improving labor market that adds weight to the notion the Federal Reserve will raise interest rates later this year.
The ADP National Employment Report showed 237,000 private-sector jobs were created last month, handily exceeding expectations of 218,000 new jobs, according to a Reuters survey of economists.
The ADP data comes a day before the U.S. Labor Department's more comprehensive non-farm payrolls report on Thursday, which is expected to show 230,000 new jobs were created last month, down from the 280,000 increase in May.
"There's potential for an upside surprise in payrolls given the read we got from ADP," said Mark McCormick, currency strategist at Credit Agricole in New York. "The fundamentals are supportive of broad dollar strength, particularly against the euro. "
The dollar was up 0.5 percent to $1.1079 against the euro
Oil fell below $63 a barrel after Greece defaulted on its IMF debt, while U.S. and production by members of the Organization of Petroleum Exporting Countries hit new highs.
Brent crude
"The oil market is being literally flooded with OPEC crude oil at present," said Carsten Fritsch, analyst at Commerzbank.
(editing by John Stonestreet, W Simon and Chizu Nomiyama)
