GLOBAL MARKETS-U.S. data lifts stocks, hopes of recovery

Published 09/09/2010, 01:06 PM
Updated 09/09/2010, 01:12 PM
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* U.S. jobless claims, trade data lift stocks, crude, euro

* Yen edges near 15-year high against dollar

* Safe-haven Treasuries fall after data (Updates with European markets' close)

By Manuela Badawy

NEW YORK, Sept 9 (Reuters) - Stronger-than-expected data on the U.S. jobs market and international trade helped to lift stocks and the euro on Thursday, bolstering optimism about an economic recovery.

The yen approached a 15-year high against the dollar as investors bet Japanese authorities were not ready to curb the currency's strength. Crude prices rose and bonds fell.

New claims for unemployment insurance fell more than expected last week to their lowest level in two months and the U.S. trade deficit narrowed more than forecast in July as exports shot to their highest level since August 2008, painting a rosier picture for growth. For details, see[ID:nN09174403].

Fears of a double-dip recession have kept investors at bay in recent months. But with data in the past week topping expectations, some have been caught off guard and brought back into the market.

"The economic numbers in the last week or so have been able to beat expectations, so that's providing some confidence that the third quarter will finish firm," said Nick Kalivas, senior equity index analyst at MF Global in Chicago.

The Dow Jones industrial average <.DJI> gained 49.12 points, or 0.47 percent, to 10,436.13. The Standard & Poor's 500 Index <.SPX> gained 7.67 points, or 0.70 percent, to 1,106.54. The Nasdaq Composite Index <.IXIC> gained 15.52 points, or 0.70 percent, to 2,244.39.

Indexes were on track to rack up their sixth day of gains in the past seven sessions in what was expected to be low volume as the Jewish New Year was celebrated. The six lowest volume days of the year have come in the last month.

The FTSEurofirst 300 <.FTEU3> index of top European shares provisionally finished 0.9 percent higher at 1,081.20 points after touching its highest since late April, boosted by the U.S. economic data.

Capping gains in the Dow industrials, McDonald's Corp , the world's largest hamburger chain, dropped 2.9 percent to $73.84 after reporting weaker-than-expected August sales in Europe. [ID:nN09231135]

The dollar is down 9.9 percent against the Japanese currency this year, which has been buoyant on global growth concerns.

Japan's Finance Minister Yoshihiko Noda said the ministry was conducting simulations on forex intervention, though the Japanese currency hardly budged as the perception remains that Tokyo is unlikely to intervene until the U.S. currency falls near 80 yen.

Noda's comments were also undermined as Bank of Japan Governor Masaaki Shirakawa said he did not talk about currencies and monetary policy at a government meeting. [ID:nTKV006408]

"Comments from Japanese authorities indicated they are not in a hurry to intervene, so new (dollar) lows should be tested," Roberto Mialich, currency strategist at UniCredit in Milan, said.

The dollar was down 0.1 percent at 83.75 yen , within sight of the 15-year low of 83.34 yen hit on trading platform EBS on Wednesday. The low using Reuters data was 83.32 yen.

The euro is near a nine-year low against the yen hit in late August. The low on Reuters data was 105.41 yen .

The single currency was last little changed against the dollar at $1.2722 .

STOCKS HIGHER

World stocks measured by MSCI All-Country World Index <.MIWD00000PUS> rose 0.6 percent. The index, which carried a 12-month forward price-to-earnings of 11.23 against a 10-year average of 15.22, is down 2.8 percent this year.

"Equity markets are getting used to the reality that economies are slowing quite significantly. The question is how much growth is required now to support equity markets," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

Illustrating the current dilemma, Deutsche Bank board member Juergen Fitschen said the risk of a credit crunch in the real economy has not abated as demand for loans rises, spurred by a rebound after the financial crisis.

In Asia, Japan's Nikkei average <.N225> rose 0.8 percent.

Oil rose above $75 a barrel, drawing strength from the U.S. data and after a government oil inventory report showed crude stocks fell last week.

U.S government bonds fell, with the benchmark 10-year note , down 20/32 in price for a yield of 2.72 percent, up from 2.65 percent late Wednesday.

The 30-year bond was down 1-10/32 in price with its yield at 3.80 percent, up from 3.74 percent late Wednesday.

Gold was little changed within sight of its recent all-time highs, recovering from an earlier drop after the release of the U.S. data. Spot gold was bid at $1,254.40 an ounce, less than 1 percent below June's record high at $1,264.90 an ounce. Earlier it fell to $1,250.30 an ounce. (Additional reporting by Leah Schnurr in New York and Tamawa Desai, Brian Gorman and Marie-Louise Gumuchian in London; Editing by Kenneth Barry)

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