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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.

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US Army may cancel programs to trim budget-official

* More agile, affordable approach to acquisitionBy Andrea Shalal-EsaWASHINGTON, Oct 11 (Reuters) - The U.S. Army's share of massive defense budget cuts will be up to $14 billion a year over the next decade, which may force the service to cancel a variety of weapons programs, a top Army official said Tuesday.Lieutenant General Robert Lennox, deputy chief of staff for weapons programs, told Reuters at the the annual Association of the U.S. Army conference (AUSA) that program cancellations were "certainly a possibility" and could affect a mix of large and smaller programs.He declined to identify which programs could be affected and said no decisions had been finalized. The Army's plans also still required approval by top Pentagon leaders, he said.Big Army suppliers like General Dynamics Corp , BAE Systems Plc , Boeing Co , Lockheed Martin Corp and Raytheon Co are keeping close tabs on Army budget plans, given widespread speculation that the service will be hit especially hard in the coming defense budget crunch as U.S. forces withdraw from Afghanistan and Iraq.Army officials acknowledge big problems with their weapons buying process in recent years but say they have learned important lessons from the Pentagon's decision to cancel its big Future Combat Systems modernization program in 2009.Lennox said the service also had racked up some successes, including the rapid development and fielding of MRAP vehicles that could withstand roadside bombs, body armor for soldiers and hundreds of unmanned aerial vehicles.Lennox told the conference that White House order to cut defense spending by over $450 billion over the next 10 years would shave $12 billion to $14 billion from the Army's annual budget each year.The "brunt" of the cuts would come in modernization and training, since cuts in the number of active-duty soldiers would not kick in quickly enough to generate needed savings.Lennox said Army budget officials were working on a budget plan for fiscal year 2013 and a related five-year budget plan but hoped to know the outcome of congressional deficit-cutting efforts before the budget is finalized.Defense spending could be cut by up to $600 billion more if the so-called congressional "super committee" fails to identify $1.2 trillion in deficit-reduction measures.Acting Army acquisition chief Heidi Shyu told reporters that the Army did not favor taking a "buzz saw" to all programs, which officials say could slow them all down and make it more difficult to move ahead later.Instead, she said, the service was trying to weigh the risks involved in possible program cancellations, factoring in the age of current weapons, existing multiyear contracts and whether putting off new purchases would sharply increase maintenance costs for existing planes and ground vehicles.Lennox said the service was also trying to factor in how quickly it could recover if it made the wrong decisions. For instance, he said, it took five years to build a new attack helicopter but far less time to build new trucks.The Army has already twice revamped its plan for developing a new ground combat vehicle and recently issued revised rules for a new light vehicle program to replace its workhorse Humvees. It also invited companies to demonstrate existing light helicopters, in a third attempt to replace the aging fleet of OH-58 Kiowa Warriors.Analysts say all three programs -- which together would be worth tens of billions of dollars to companies in coming years -- could be scrapped or delayed because of the budget cuts.Shyu said the Army was developing a more agile and affordable process for buying weapons, injecting more competition and figuring out early how much military requirements added to the cost of new weapons, she said.Lennox said Army acquisition officials were trying to set priorities within weapons portfolios and make trade-offs earlier in the process that should damp cost growth."I really hate to think that because you screwed up 10 years ago, that you're going to be forever stupid," Shyu said. "We are learning ... what we need to do to change our processes."