* Global stocks rally as Home Depot, Target surprise
* Crude oil firms above $69 ahead of inventory data
* Euro lifted by ZEW data but retreats from day's high
* Gold firms as dollar declines, oil prices recover
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Aug 18 (Reuters) - Global stocks rallied on
Tuesday, rebounding from the previous day's sharp fall, and oil
prices rose above $69 a barrel as encouraging results from two
U.S. retailers bolstered sentiment about a recovering economy.
The U.S. dollar and yen fell after a strong report on
German investor morale and gains in stock markets worldwide
eroded safe-haven demand for the two currencies. For more see
[].
Equities recovered from sharp declines on Monday, lifting
risk appetite and more than offsetting a surprise drop in U.S.
housing starts in July.
Rising stock markets led U.S. Treasury debt prices to
mostly ease and give back a little of Monday's big gains on the
eroding allure of safe-haven government debt.
"We had the strong (German) ZEW survey and that bolstered
sentiment, (which) spilled over into the U.S.," said Matthew
Strauss, senior currency strategist at RBC Capital Markets in
Toronto. "The market became a little bit more confident that
maybe yesterday's sell-off was a bit excessive."
Better-than-expected corporate results from U.S. retailers
Home Depot Inc <HD.N> and Target Corp <TGT.N> helped lift Wall
Street and offset concerns about the U.S. housing outlook.
U.S. housing starts and permits for new building slipped in
July, while the inventory of total houses under construction
fell to a record low, a government report showed.
However, some analysts said that fewer new houses may allow
the market to absorb inventory and support prices, leading
homebuilders higher. [] The Dow Jones home
construction <.DJUSHB> index rose 2.6 percent.
"We are seeing some tentative signs of improvement in the
market this morning, following yesterday's losses around the
world," said Michael Sheldon, chief market strategist at RDM
Financial in Westport, Connecticut.
The Dow Jones industrial average <> closed up 82.60
points, or 0.90 percent, at 9,217.94. The Standard & Poor's 500
Index <.SPX> rose 9.94 points, or 1.01 percent, at 989.67. The
Nasdaq Composite Index <> added 25.08 points, or 1.30
percent, at 1,955.92.
The euro rose from multi-week lows against the dollar and
yen, while sterling gained as data showed UK consumer prices
held steady in July.
In late trade the euro was up 0.4 percent at $1.4132
<EUR=>, and was also up 0.7 percent at 133.83 yen <EURJPY=R>.
The dollar added 0.2 percent to 94.71 yen <JPY=>.
Oil tracked gains on Wall Street and currency markets.
U.S. crude for September delivery <CLc1> settled at $69.19
a barrel, up $2.44, or 3.66 percent.
London Brent crude for October <LCOc1> settled at $72.37,
up $1.83.
"We are just taking our cues from the S&P and the dollar,"
said Stephen Schork, editor of The Schork Report in Villanova,
Pennsylvania.
Oil investors also turned their focus to inventory data.
The release of weekly data from the American Petroleum
Institute at 2030 GMT will be followed by U.S. government
figures from the Energy Information Agency on Wednesday, with
analysts expecting more signs of weak U.S. demand.
European equities ended higher after hitting a two-week low
on Monday, with stronger crude oil prices supporting energy
shares and Swedbank <SWEDa.ST> leading banking shares higher.
The FTSEurofirst 300 <> index of top European shares
came under some pressure on the U.S. housing data, but moved
back up to close 1.4 percent higher at 934.56.
Gold futures rebounded as the dollar fell against the euro,
and the inverse relationship between bullion and the U.S.
currency could continue to strengthen in the near term.
U.S. December gold futures <GCZ9> settled up $3.40 at
$939.20 an ounce on the COMEX division of the New York
Mercantile Exchange.
Japan's Nikkei share average <> rose 0.2 percent on
Tuesday on some late session buying of technology shares, while
the MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> gained 0.3 percent.
(Reporting by Edward Krudy, Steven C. Johnson and Chris Reese
in New York and Atul Prakash, Emelia Sithole-Matarise, Joe
Brock, Ian Chua and Jan Harvey in London; Writing by Herbert
Lash; Editing by James Dalgleish)
