* U.S. stocks rise, led by Wal-Mart, financials
* U.S. retail sales, jobless claims disappointing
* German, French return to growth boosts Europe shares
* Government bond yields drop on weak U.S. data
* U.S. dollar weaker, commodities rise
(Updates with New York market close, comment)
By Daniel Bases
NEW YORK, Aug 13 (Reuters) - U.S. stocks shook off some
disappointing economic data and losses on Thursday to keep a
global rally alive after Germany and France reported economic
growth in the second quarter, sending share prices higher.
Commodity prices rose while the U.S. dollar lost ground to
the euro after the better-than-expected gross domestic product
data, although overall the euro zone still remained just in
recession during the second quarter, its GDP falling 0.1
percent. For more see [].
American consumers pulled their purse strings tighter in
July, making retail sales fall 0.1 percent, although upbeat
earnings from the world's biggest retailer, Wal-Mart Stores Inc
<WMT.N>, helped lift U.S. stocks. []
U.S. stocks closed near their highs as the rebound gained
strength as the trading day wore on. The Dow Jones industrial
average <> gained 0.4 percent while the Standard & Poor's
500 Index <.SPX> rose 0.7 percent and the Nasdaq Composite
Index <> ended 0.5 percent higher at the end of the day.
"What really helped us this morning was Wal-Mart coming out
and kind of across the board saying early back-to-school
numbers were pretty good," said Warren Simpson, managing
director at Stephens Capital Management in Little Rock,
Arkansas.
"That kind of keyed the market, at least having some
resiliency and some support, and consequently we've rallied
just a little here," Simpson said.
Analysts had expected retail sales to rise as a result of
the government "cash for clunkers" program, which gives
consumers cash to swap aging gas-guzzlers for new, more
fuel-efficient models.
The disappointing sales data combined with a rise in weekly
U.S. jobless claims to revive investor concerns about the vigor
of any economic recovery and sent U.S. Treasury prices higher.
[]
On Wednesday the Federal Reserve said the trajectory of the
U.S. downturn was leveling off but sluggish income growth and
continued job losses were constraining consumer spending.
Financial stocks were among the winners on Thursday.
In U.S. trade, Bank of America Corp <BAC.N> rose 6.7
percent to $17 on news that hedge fund manager John Paulson,
who made a fortune betting against financial companies after
foreseeing the credit crisis, had stocked up on the bank's
shares during the second quarter. []
In European trade, shares of Swiss banking giant UBS
<UBSN.VX> rose 5.4 percent as investors expected the settlement
of a damaging U.S. tax dispute to allow the bank to focus on
becoming profitable again. []
STOCKS RALLY EXTENDS
World stocks as measured by MSCI <.MIWD00000PUS> reached a
fresh 10-month high, up over 1.2 percent on the day and up 17
percent since mid-July.
Japan's Nikkei share average <> rose 0.8 percent,
driven by big auto exporters and tech shares.
Europe's benchmark FTSEurofirst 300 <> index rose 0.7
percent but fell from an earlier 9-month high.
The markets rallied after Germany and France, the euro
zone's two biggest economies, both reported 0.3 percent second-
quarter growth, ending their recessions earlier than expected.
"The improving figure for euro zone GDP is relatively good
news, but it's too early to declare victory," said Marc Touati,
chief economist at Global Equities in Paris.
The euro gained 0.6 percent at $1.4283 <EUR=> after rising
to $1.4327, its best level in a week, while the dollar fell 0.8
percent to 95.33 yen <JPY=>.
Against a basket of major trading-partner currencies, the
U.S. Dollar Index <.DXY> dropped 0.5 percent as investors
switched to riskier assets such as commodities after the Fed's
statement that the U.S. economy was reaching a trough.
"Looking forward, markets will pay very close attention to
consumer behavior to test the sustainability of this recovery,"
said Matthew Strauss, senior currency strategist at RBC Capital
Markets in Toronto.
Copper prices reached fresh 10-month highs <HGc1> while
crude oil prices <CLc1> rose 99 cents to $71.15 a barrel. Spot
gold <XAU=> rose $8.10, or nearly 0.9 percent, to $954.15.
U.S. Treasuries prices surged on the U.S. data, while a
well received $15 billion auction of 30-year Treasury bonds,
the last leg of a record $75 billion quarterly refunding,
helped extend those gains.
The benchmark 10-year Treasury note's yield fell to 3.61
percent <US10YT=RR> from 3.72 percent on Wednesday. The 30-year
Treasury bond <US30YT=RR> yield dropped to 4.44 percent from
4.54 percent in the prior session.
European government bond yields also fell after the
weaker-than-expected U.S. data. Ten-year Bunds yielded 3.431
percent <EU10YT=RR>, off about three basis points, while
interest rate-sensitive two-year Schatz yields were four basis
points lower at 1.411 percent <EU2YT=RR>.
(Additional reporting by Angela Moon, Richard Leong, Nick
Olivari and Chuck Mikolajczak in New York; Lucia Mutikani in
Washington; Nicole Maestri in San Francisco; Blaise Robinson in
Paris and Ian Chua, Joe Brock and Kirsten Donovan in London;
Editing by James Dalgleish)
