* Shorter bonds surge on strong auction of $35 bln in debt
* Oil jumps nearly 3 pct to $70 on weak dollar, demand
* Euro rises above $1.40, dollar buying runs out of steam
* Texas Instruments lifts tech stocks, Dow closes flat
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 9 (Reuters) - The U.S. dollar fell broadly
on Tuesday and pushed up crude oil nearly 3 percent as
investors questioned whether an improving economy warrants talk
of higher U.S. interest rates this year after all.
A U.S. government report forecasting increased energy
demand also drove up the price of crude.
U.S. copper futures rallied more than 5 percent, helped by
the renewed weakness in the dollar, and U.S. gold futures
rebounded from Monday to end higher.
Short-term costs to borrow dollars fell, meanwhile, on
reduced concerns that the Federal Reserve might raise interest
rates sooner than the market expects.
At one point the euro extended gains versus the dollar to
trade above $1.41.
Joseph Trevisani, chief market strategist at FX Solutions
in Saddle River, New Jersey, said investors who bought the
dollar recently betting on higher borrowing costs were at
risk.
"Interest rates are not going to go up in this country
anytime soon," Trevisani said.
Rate-hike worries also retreated on news the government
approved 10 of the largest U.S. banks to pay back $68 billion
in federal bailout money. See []
Michael Woolfolk, currency strategist at The Bank of New
York-Mellon, said there was a "very trivial chance that the
United States will see significant inflation in the next 12
months."
Oil settled at a seven-month high above $70 a barrel after
the U.S. Energy Information Administration raised its forecast
for 2009 world demand by 10,000 barrels per day from its May
report amid signs of an economic recovery.
"The EIA data showing it has raised its world and U.S. oil
demand forecast for the first time since September is a sign
that things are stabilizing on the demand side," said Phil
Flynn, analyst at Alaron Trading in Chicago.
U.S. crude <CLc1> settled up $1.92 at $70.01 a barrel, the
highest settlement since Nov. 4. London Brent crude <LCOc1>
gained $1.74 to settle at $69.62 a barrel.
The Nasdaq rose after an improved outlook from Texas
Instruments lifted technology stocks, but the Dow fell slightly
and the S&P's gains were limited on concerns whether plans by
big banks to repay government bailouts would help the economy.
Shares of Texas Instruments Inc <TXN.N> jumped 6.3 percent
to $21.02 after it raised its quarterly earnings and revenue
targets, signaling improving demand in the chip market. For
details, see[]
The PHLX semiconductor index <.SOXX> climbed 4.5 percent.
The Dow Jones industrial average <> closed down 6.27
points, or 0.07 percent, at 8,758.22. The Standard & Poor's 500
Index <.SPX> was up 2.12 points, or 0.23 percent, at 941.26.
The Nasdaq Composite Index <> was up 15.61 points, or 0.85
percent, at 1,858.01.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
9/32 in price to yield 3.86 percent. The 2-year U.S. Treasury
note <US2YT=RR> gained 5/32 in price to yield 1.33 percent.
The August gold contract <GCQ9> settled up $2.20 at $954.70
an ounce in New York.
In Europe, shares closed higher as the news from Texas
Instruments drove up shares of cellphone maker Nokia
<NOK1V.HE>.
The pan-European FTSEurofirst 300 <> index of top
shares closed 0.5 percent higher at 869.56 points.
Asian shares fell overnight as investors worried a
three-month rally may be overdone. The MSCI Asia-Pacific index
of stocks outside Japan <.MIAPJ0000PUS> fell 0.6 percent, while
Japan's Nikkei average <> retreated 0.8 percent.
(Reporting by Matthew Robinson, Chuck Mikolajczak, Vivianne
Rodrigues, Ellen Freilich in New York; Kirsten Donovan, Ian
Chua in London; writing by Herbert Lash; Editing by Leslie
Adler)
