(Adds New York closing levels)
* World equities break 5-day losing streak
* Europe fiscal concern saps euro strength vs. dollar
* Year-end profit-taking and volatility cited
By Al Yoon
NEW YORK, Dec 10 (Reuters) - World stocks broke five
consecutive days of losses on Thursday as U.S. economic reports
supported a theme of stronger growth in 2010, while persistent
dollar weakness outlasted euro-zone fiscal concerns.
Fiscal costs of steering the U.S. economy out of recession
manifested themselves in reduced demand for Treasury debt and
higher long-term U.S. borrowing costs.
Wall Street shares rose after the U.S. government said the
trade deficit unexpectedly shrank in October, indicating
businesses gained traction off the weakened U.S. dollar.
Another report showed the four-week average for jobless claims
fell for a 14th week, even as initial claims edged higher in
the last period.
Despite gains in equities on Thursday, investors globally
have been protecting profits and taking few risks before
year-end. World stocks as measured by the MSCI soared about 76
percent through last week from their March lows.
"You've had a tremendous movement this year, and you'll see
a continued battle between people putting away whatever they've
earned this year in profits and investors still thinking there
might be more room to run," said Rick Meckler, president of
LibertyView Capital Management in New York.
Rallies have been capped since November as investors debate
the prospects for U.S. growth amid expectations of high
unemployment, amid a climate of concern over the
credit-worthiness of various troubled economies.
Ratings agency Standard & Poor's warned on Wednesday that
Spain risks a debt downgrade in two years if the government
does not take tough action on its fiscal deficit.
Fitch Ratings has already downgraded Greece, while Moody's
cut the ratings of six Dubai-linked issuers after concluding
that no "meaningful" government support would be provided to
top firms such as DP World.
MSCI's all-country world stock index <.MIWD00000PUS>
increased 0.43 percent to 295.27, having lost about 3 percent
since hitting a one year-high a week ago.
The Dow Jones industrial average <> rose 68.78 points,
or 0.67 percent, to 10,405.83. The Standard & Poor's 500 Index
<.SPX> climbed 6.40 points, or 0.58 percent, to 1,102.35 and
the Nasdaq Composite Index <> gained 7.13 points, or 0.33
percent, to 2,190.86.
European stocks rebounded as some investors reassessed
risks from the region's more vulnerable economies. The
pan-European FTSEurofirst 300 <> rose 1.04 percent.
DOLLAR STRUGGLES
The U.S. dollar slipped against the euro on Thursday
despite concern about euro zone deficits while Australia and
New Zealand's currencies soared as strong economic data hinted
at further interest rate rises.
The U.S. economic reports boosted hopes that the economy
continued to improve and encouraged modest moves into stocks
and other relatively risky assets, which are often financed by
borrowing the Japanese yen at low interest rates.
The U.S. Dollar Index <.DXY> edged lower by 0.05 percent to
76.001. The euro <EUR=> rose 0.04 percent to $1.4730 and the
dollar gained 0.38 percent to 88.19 yen <JPY=>.
U.S. Treasury 30-year bond yields jumped to four-month
highs after a poorly bid $13 billion auction rekindled worries
over the huge federal budget deficit. Some analysts worried
that the long bond auction was a sign of tough times to come
for a government that has tried to borrow its way out of a
credit crisis.
"It was pretty ugly. The old lump of coal in the stocking,"
said Kim Rupert, managing director of global fixed income
analysis at Action Economics LLC in San Francisco.
The 30-year bond <US30YT=RR> yield rose as high as 4.51
percent from 4.42 percent. Yields on benchmark 10-year Treasury
notes <US10YT=RR> rose 0.07 percentage point to 3.50 percent.
In energy and commodities trading, U.S. light sweet crude
oil <CLc1> fell 9 cents, or 0.13 percent, to $70.58 per
barrel, and spot gold prices <XAU=> rose $2.30, or 0.20
percent, to $1130.60.
(Additional reporting by Leah Schnurr, Burton Frierson, Atul
Prakash and Jessica Mortimer; Editing by Dan Grebler)
