* Stocks rally on hopes China may be on brink of recovery
* Oil jumps almost 9 pct on surprise U.S. inventory draw
* Dollar hits 4-month high vs yen, clears 99 mark
* Debt prices tumble as equity demand, issuance weight
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, March 4 (Reuters) - World stocks jumped off
multiyear lows on Wednesday as hopes of recovery in China and
plans by its government to increase spending also helped
trigger a surge in oil and metals prices.
Crude prices settled nearly 9 percent higher after Chinese
manufacturing in February rose for a third straight month and
U.S. data showed an unexpected drop in crude stockpiles last
week as gasoline demand also increased.
The dollar climbed four-month peaks against the yen as the
news out of China, including plans to increase infrastructure
and manufacturing spending, revived investors' risk appetite.
U.S. government debt prices fell as a rebound of more than
2 percent in the three major U.S. stock indexes dampened the
appeal of fixed-income assets. Concerns about ballooning bond
issuance also weighed on Treasuries. []
The slide in government debt prices was somewhat
surprising as investors appeared to ignore the loss of almost
700,000 jobs in February, data that normally sends bonds
higher.
The five-month high in Chinese manufacturing raised hopes
that China, a major driver of global growth, may be on the
brink of economic recovery.
Copper for May delivery <HGK9> rose 5.6 percent on a drop
in inventories and the spending plans in China, the world's
biggest consumer of the metal. The Shanghai Composite Index
<>, the main Chinese stock index, surged 6.1 percent in
its biggest gain since November. []
"The biggest news today came out of China and that seems
to have a bigger impact on risk appetite than market
activity," said Robert Blake, senior currency strategist at
State Street Global Markets in Boston.
U.S. stocks snapped a five-day sell-off that had pushed
the leading indexes to 12-year lows.
The Dow Jones industrial average <> closed up 149.82
points, or 2.23 percent, at 6,875.84. The Standard & Poor's
500 Index <.SPX> rose 16.54 points, or 2.38 percent, to
712.87. The Nasdaq Composite Index <> climbed 32.73
points, or 2.48 percent, to 1,353.74.
Both Dow component Caterpillar Inc <CAT.N>, a big exporter
to China and a major seller of equipment to the mining
industry, and miner Freeport-McMoRan Copper & Gold Inc <FCX.N>
finished Wednesday's session with 13 percent gains.
European shares rallied, breaking three straight sessions
of losses as higher oil and other commodity prices -- driven
by China hopes -- spurred investors to buy energy and natural
resource stocks.
"The market is encouraged by the news from China," said
Joe Arsenio, president of Arsenio Capital Management in
Larkspur, California. "They believe (China) will gain traction
in the second quarter."
The FTSEurofirst 300 <> index of top European shares
closed at 696.23 points, up 4 percent.
The rise in equity markets around the world overshadowed
more dire economic data suggesting that the U.S. and euro-zone
recessions have yet to hit bottom.
U.S. private companies hemorrhaged 697,000 jobs in
February and the slump in the service sector deepened
[].
The dollar vaulted to a four-month high against the yen as
another slide in U.S. payrolls and persistent worries about
the world economy boosted safe-haven flows into the U.S.
currency. []
The dollar rose as high as 99.49 yen, closing in on 100
for the first time since early November. In late New York
trading, the dollar <JPY=> was up 0.75 percent at 99.04 yen.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.84 percent at 88.439.
The euro <EUR=> rose 0.57 percent to $1.2637.
U.S. government debt fell. The benchmark 10-year U.S.
Treasury note <US10YT=RR> slid 28/32 in price to yield 2.99
percent. The 2-year U.S. Treasury note <US2YT=RR> shed 5/32 in
price to yield 0.96 percent.
U.S. crude oil futures <CLc1> for April delivery gained
$3.73 higher, or 8.96 percent, to settle at $45.38 a barrel.
London Brent crude <LCOc1> rose $2.42 to settle at $46.12
a barrel.
Gold for April delivery <GCJ9> fell $6.90 to settle at
$906.70 an ounce in New York. []
(Reporting by Leah Schnurr, John Parry, Steven C. Johnson in
New York and Emelia Sithole-Matarise, Ian Chua, Christopher
Johnson, Jan Harvey and Rebekah Curtis in London and Peter
Starck in Frankfurt; writing by Herbert Lash; Editing by Jan
Paschal)
