Outlook rosy for U.S. stocks thanks to euro woes

(Reuters) - Europe's struggle to reduce its mountain of government debt is brightening the outlook for U.S. stocks as investors turn to American assets for safety.

Strong corporate balance sheets, rising profits, economic growth on an upswing and the Federal Reserve's pledge to keep interest rates low make Wall Street look like a good destination even for those who have missed the year-long stock market rally.

The recovery in U.S. equities seemed to be running out of steam recently, with the S&P 500 stock index .SPX up in 12 of the previous 14 months, stocks technically overbought, and Europe's economic recovery seen stalling.

But the 750 million euro ($1 trillion) aid package thrown at the European debt crisis, and the promise by Greece, Portugal and Spain that they would get to grips with their debt problems, helped the S&P 500 post its largest three-day run in 10 months earlier this week. The S&P 500 lost ground Thursday and Friday but still managed to close its best week in the last 10.

"I think (the European crisis) will cause investors to appreciate the U.S. much more and money will start coming into the U.S. stock market," said Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas.

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