* Many world stocks indices set new 2009 highs on optimism
* U.S. dollar drops across the board as risk-taking rises
* Bonds little changed as yields draw bargain-hunters
* Oil rises as CIT deal news fuels optimism over recovery
(Updates with U.S. markets activity, changes byline, dateline;
previous LONDON)
By Herbert Lash
NEW YORK, July 20 (Reuters) - Crude oil and global stocks
rose on Monday, with a number of major indices setting 2009
highs, on fresh signs that the U.S. economy is pulling out of
recession and optimism over a rescue package for lender CIT.
The dollar weakened broadly, slipping to a six-week low
against the euro, as investors jumped back into riskier assets
amid further solid second-quarter U.S. earnings.
The price of U.S. and euro zone government debt mostly fell
as demand for safe-haven assets slid, while copper hit a
nine-month high and gold rose more than 1 percent on a weaker
dollar and improving economic sentiment.
An index gauging the U.S. economy's prospects increased for
a third straight month in June, suggesting the recession was
drawing to a close, the New York-based Conference Board said.
The index of leading economic indicators, which is supposed
to forecast economic trends six to nine months ahead, rose 0.7
percent in June following a revised 1.3 percent gain in May.
"The confirmation of recovery is coming from top down and
bottom up," said Georgina Taylor, equity strategist at Legal &
General Investment Management. "Companies are suggesting that
things are starting to improve. Economic data is stabilizing."
Asian stocks outside of Japan <.MIAPJ0000PUS> rose to their
highest since world stocks plunged following Lehman Brothers'
collapse last September.
Global stocks, as measured by MSCI's all-country world
index <.MIWD00000PUS>, rose to a new 2009 high as did MSCI's
measures for emerging markets <.MSCIEF>, and the tech-rich
Nasdaq <> in the United States also set a 2009 high.
Equity markets built on last week's rally, with Britain's
top share index and European shares rising for a sixth straight
day. Banks led the surge, with commodity shares jumping on
stronger crude oil and metal prices.
The FTSE 100 index <> closed up 1.3 percent at
4,443.62, while the FTSEurofirst 300 <> index of top
European shares rose 1.2 percent to 881.19, its highest close
since June 12.
Helping lift U.S. and European shares was news that lender
CIT Group Inc has agreed a $3 billion rescue with bondholders,
a person close to the matter said. For more see [].
Giri Cherukuri, head trader at OakBrook Investments LLC in
Lisle, Illinois, said the market was advancing on relief over
the expected deal that would prevent CIT from sinking.
Machinery maker Caterpillar Inc <CAT.N> rose 6.9 percent
and was the top boost to the Dow after Bank of America-Merrill
Lynch upgraded the stock to "buy," saying the second quarter
may mark a bottom for the construction market. []
Blue-chip Cisco Systems Inc <CSCO.O> gained 2.9 percent
following an upgrade of its stock by Credit Suisse, based on
what the bank saw as expected earnings momentum against a
backdrop of low expectations. []
At 1 p.m., the Dow Jones industrial average <> was up
59.32 points, or 0.68 percent, at 8,803.26. The Standard &
Poor's 500 Index <.SPX> was up 6.11 points, or 0.65 percent, at
946.49. The Nasdaq Composite Index <> was up 14.87 points,
or 0.79 percent, at 1,901.48.
Oil rose on optimism about a potential global economic
recovery and expectations of a turnaround in fuel demand.
U.S. light sweet crude oil <CLc1> rose 40 cents to $63.96 a
barrel.
"I think it's mostly continued follow-through after last
week's rally. Economic optimism fueling stronger equities and
the weaker dollar are supporting commodity markets," said Tom
Bentz, analyst at BNP Paribas Commodity Futures Inc.
The euro rose as high as $1.4249, according to Reuters
data, its strongest since early June and the yen was under
broad pressure.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.58 percent at 78.887.
The euro <EUR=> was up 0.94 percent at $1.4229, and against
the yen, the dollar <JPY=> was up 0.18 percent at 94.34.
"It's a risk-preference story. With equities firmer and
breaking some semi-interesting levels, the dollar has come
under pressure as a result," said John McCarthy, director of
foreign exchange at ING Capital Markets in New York.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
12/32 in price to yield 3.61 percent. The 2-year U.S. Treasury
note <US2YT=RR> was up 1/32 to yield 0.99 percent.
Spot gold prices <XAU=> rose $14.00 to $950.70 an ounce.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 2.9 percent to its highest since Sept. 29.
Japan's markets were shut for a public holiday.
(Reporting by Rodrigo Campos, Gertrude Chavez-Dreyfuss, Burton
Frierson and Matthew Robinson in New York and Ian Chua and
Brian Gorman in London; Writing by Herbert Lash; Editing by
James Dalgleish)
