* U.S. stocks falter amid fears of recovery won't last
* Dollar, yen fall after U.S. data boosts risk appetite
* Oil rises on strong U.S., China manufacturing data
* Bonds fall as improving data erodes safe-have appeal
(Updates with U.S. markets, changes byline, dateline
previously LONDON)
By Herbert Lash
NEW YORK, Nov 2 (Reuters) - Crude oil rebounded on Monday
as strong factory activity worldwide and a surprise rise in
U.S. pending home sales boosted risk appetite after last week's
sell-off, but stocks faltered on fears the economic recovery is
still on shaky ground.
The dollar and yen fell while government debt on both sides
of the Atlantic slipped as the improving economic data
worldwide and rising stock prices eroded the demand for the
traditional safe-haven investments. For details, see:
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Gold climbed above $1,060 an ounce, near October's record
high at one point, and copper rose on the falling dollar and
strong manufacturing data from the euro zone, the United States
and China, the world's largest consumer of industrial metals.
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Oil rose as the factory data stoked optimism for a
turnaround in the global economy and in fuel demand.
[]
U.S. stocks initially rose on the stronger-than-expected
economic data, but turned course around midday and then
recovered a bit to trade close to unchanged.
"I think we've got a situation where the smart people
really believe the market should be sold here -- we need a real
correction," said Jeffrey Frankel, president of Stuart Frankel
& Co in New York.
Corporate results continued to outperform. Ford Motor Co
<F.N> shares jumped 9.1 percent after the U.S. auto maker
posted a surprising quarterly profit on cost cuts, improved
credit results and increased market share. [].
Shortly after 1 p.m., the Dow Jones industrial average
<> was up 31.89 points, or 0.33 percent, at 9,744.62. The
Standard & Poor's 500 Index <.SPX> was up 0.42 points, or 0.04
percent, at 1,036.61. The Nasdaq Composite Index <> was
down 7.11 points, or 0.35 percent, at 2,038.00.
European shares closed higher, boosted by the U.S. economic
data, with commodities and banks the major gainers.
The pan-European FTSEurofirst 300 <> index of top
shares closed up 0.4 to 980.28 points, having earlier been as
low as 968.19 points.
U.S. bond market losses were short-lived because investors
were looking ahead to other key data due this week and to what
the Federal Reserve will say on Wednesday at the end of the
Federal Open Market Committee's two-day policy meeting.
"We've had a reversal of some of last week's gains in
Treasuries and a reversal of some of last week's losses in
equities," said John Canavan, market analyst at Stone &
McCarthy Research Associates in Princeton, New Jersey.
Euro zone government debt avoided a wider sell-off as
equities failed to wrest big gains on caution ahead of major
central bank meetings later in the week. Cash flows from
redemptions of maturing bonds worth over 22 billion euros
provided underlying support for bonds.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
3/32 in price to yield 3.40 percent.
In currencies, the dollar fell against a basket of major
currencies, with the U.S. Dollar Index <.DXY> down 0.13 percent
at 76.204.
The euro <EUR=> was up 0.38 percent at $1.4771, and against
the yen, the dollar <JPY=> was up 0.14 percent at 90.21.
U.S. light sweet crude oil <CLc1> rose 49 cents, or 0.64
percent, to $77.49 per barrel.
Spot gold prices <XAU=> rose $11.80, or 1.13 percent, to
$1,056.20.
Earlier in Asia, worries about the U.S. financial sector
resurfaced after CIT Group Inc <CIT.N>, the lender to small and
mid-sized U.S. companies, filed for bankruptcy.
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fell 1 percent to touch a one-month low.
Japan's Nikkei average <> dropped 2.3 percent, mirroring
the 2.8 percent slide in the U.S. S&P 500 <.SPX> on Friday.
(Reporting by Leah Schnurr, Wanfeng Zhou, Matthew Robinson and
Ellen Freilich in New York; Emelia Sithole-Matarise and Joanne
Frearson in London; writing by Herbert Lash; Editing by Leslie
Adler)
