Crisis fears ease in Europe, and Wall Street parties on

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Europe’s debt crisis may not be over, but for a day at least it didn’t getting worse.

And on Wall Street, the bulls again are asking why they should care about the Old World’s problems.

Yields on Greek, Portuguese and Spanish government bonds fell sharply Thursday after European leaders again said they were moving quickly on the promised bailout package for Greece, a joint rescue with the International Monetary Fund.

European Union Economic and Monetary Affairs Commissioner Olli Rehn said negotiators were “working day and night” to wrap up the deal. ‘I am confident the talks will be concluded in the next days,’ Rehn said. That was enough to cause some bond bears to back off for the moment -- even though, as RBS Securities currency strategist Alan Ruskin put it, “the capacity for participants in the Greek/EU/IMF bailout to shoot themselves in the foot, and then repeat the exercise, should on recent evidence not be underestimated.”

As fears receded a bit, the yield on two-year Greek notes tumbled to 12.89%, from 15.91% on Wednesday.

More important, the markets saw a lower risk of “contagion” within Europe from Greece’s fiscal debacle: Yields also dropped on Portuguese bonds, which in recent days have been battered by fears that Portugal, too, would need a bailout package to meet its heavy debt obligations.

The yield on two-year Portuguese notes slid to 4.27%, from 4.83% on Wednesday.

European stock markets turned higher after two days of selling. Greece’s main index surged 7.1% after plunging nearly 18% from April 12 through Tuesday. Most European markets were up between 1% and 2% Thursday.

Meanwhile, U.S. stocks advanced broadly for a second day on the strength of blockbuster quarterly earnings reports from companies including Occidental Petroleum, Kellogg Co. and Starwood Hotels and Resorts.

The Dow industrials were up 139 points, or 1.3%, to 11,184 at about 11:30 a.m. PDT. After diving 1.9% on Tuesday in a sell-off blamed on Europe’s worsening debt woes, the Dow is nearly back to its 19-month closing high of 11,205 reached Monday.

Until notified otherwise, Wall Street bulls don’t believe that the U.S. economic recovery -- or at least the corporate profit recovery -- will be derailed by Europe.

-- Tom Petruno