* Global stocks slip but Wall St rebounds on rally outlook
* Dollar at 1-month high vs euro, yen as bond yields rise
* Oil hits 25-month high on heavy U.S. inventory drawdown
* U.S. bonds rebounds as two-day sell-off lures buyers
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Nov 10 (Reuters) - The dollar hit a one-month
high on Wednesday after data pointed to an improving U.S. labor
market while Wall Street rose as investors set aside recent
worries whether a rally would continue.
But global stocks fell as Ireland's borrowing costs hit
another euro lifetime high and investors worried that a Federal
Reserve move announced last week to buy $600 billion in
Treasury debt to bolster the U.S. economy may have unintended
consequences.
The dollar extended gains as a rise in U.S. bond yields for
most of the session prompted traders to reduce bets against the
greenback. Oil prices soared to their highest level in 25
months, breaking their recent strong inverse correlation with
the dollar. For details see: [] []
Investors have sold dollars in recent months and bet that
the Fed's plans to pump more money into the U.S. economy to
boost growth would drive already low U.S. rates even lower. So
far, those expectations have been frustrated.
"The U.S. yield curve has steepened, and since the whole
world has had the same position on, we've got a lot of
end-of-the-year, risk management going on," said Sebastien
Galy, senior currency strategist at BNP Paribas.
The euro fell as low as $1.3671 and was last changing hands
at $1.3777 <EUR=>, barely lower on the day.
The dollar climbed as high as 82.79 Japanese yen <JPY=>, up
more than 1.0 percent, and last traded at 82.23.
A decline in initial U.S. jobless claims had some analysts
suggesting the American economy was starting to gain traction
after months of sluggish growth. []
Global stocks slipped 0.7 percent, as measured by MSCI's
all-country world index <.MIWD00000PUS>, but Wall Street rose.
Trading in Tokyo was poised to open lower, with the
December futures contract that trades in Chicago for the Nikkei
225 <0#NK:> down 20 points at 9,860.
U.S. stocks gained as rising oil prices lifted energy
shares and banks rebounded after suffering 3 percent losses
over the past two sessions.
The S&P 500 Financials index <.GSPF> gained 1.4 percent and
was the best performer of the S&P 500's top 10 sectors. The S&P
energy index <.GSPE> ended up 1.3 percent as U.S. crude for
December delivery <CLc1> settled at $87.81 a barrel, the
highest close since October 2008.
Oil has gained seven of the last eight sessions, pushing
prices up $6.38 a barrel, or 7.8 percent.
Stocks still have upside momentum, especially after falling
about 1 percent in the previous two sessions, said Randy
Frederick, director of trading and derivatives at the Schwab
Center for Financial Research in Austin, Texas.
The Dow Jones industrial average <> closed up 10.29
points, or 0.09 percent, at 11,357.04. The Standard & Poor's
500 Index <.SPX> gained 5.31 points, or 0.44 percent, at
1,218.71. The Nasdaq Composite Index <> rose 15.80 points,
or 0.62 percent, at 2,578.78.
U.S. stocks were down earlier as investors worried the Fed
might buy less debt than planned, while others feared the
increased liquidity has propelled commodity prices higher,
which could induce a harmful bout of inflation.
U.S. cotton futures charged to an all-time high but closed
sharply lower for the first time in nine sessions as heavy
investor selling and profit-taking finally deflated the
market's record run, analysts said. []
Precious metals, however, steadied after futures of gold,
and particularly silver, plunged in after-hour trade the
previous session. []
Gold hit a record high near $1,425 an ounce on Tuesday.
U.S. gold futures for December delivery <GCZ0> settled down
$10.80 an ounce at $1,399.30 in New York.
Silver for December delivery <SIZ0> settled down $2.041, or
7.1 percent, at $26.865 in its biggest loss in two years.
U.S. Treasuries slid in volatile trade after a weak auction
of 30-year government debt, although bargain hunting pulled
bonds off the day's lows and led a rebound. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
8/32 in price to yield 2.63 percent.
The poor bond auction highlighted worries that demand for
longer-dated debt is dwindling after that sector of the yield
curve was sidelined by the Fed's $600 billion purchase plan.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.25 percent at 77.64.
Japan's Nikkei average <> closed up 1.4 percent, led
by exporters, which were among the chief beneficiaries of the
dollar's rise. The MSCI index of Asian shares outside of Japan
<.MIAPJ0000PUS> fell 0.8 percent.
(Reporting by Gertrude Chavez-Dreyfuss and Emily Flitter in
New York; Christopher Johnson and Amanda Cooper in London;
Writing by Herbert Lash; Editing by Kenneth Barry)
