* Oil extends rally to over $73 as data spurs demand hopes
* U.S. government debt rises after long-bond auction
* Euro rises above $1.41 as U.S. dollar weakness broadens
* Industrial metals hit 8-month high on demand hopes
(Updates with U.S. markets activity; dateline previously
LONDON)
By Herbert Lash
NEW YORK, June 11 (Reuters) - Global stocks rose and oil
prices rallied to over $73 a barrel on Thursday after upbeat
news and data from around the world pointed toward an economic
recovery.
Copper, zinc, lead, tin and nickel all jumped to their
highest levels since last October on growing optimism about
industrial consumption, while the euro broke above $1.41 and
demand waned for the U.S. dollar as a safe-haven.
U.S. retail sales rose for the first time in three months
in May and the number of American workers filing new claims for
jobless benefits last week hit the lowest level since January.
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The data bolstered the argument that the severe U.S.
recession was close to bottoming, while surging Chinese
investment in May fueled hopes of a global recovery.
Bank-to-bank dollar funding costs eased again, with the
three-month rate retesting a record low as market speculation
of a U.S. interest rate hike by year-end was seen as overdone.
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"The big picture as we see it is that there's fairly
convincing evidence now that the recession is ending. The data
is basically unanimous on that point," said Zach Pandl, an
economist at Nomura Securities in New York.
"But there is still a lot of concern about what the economy
is going to look like on the other side of the recession."
Predicting when economies will recover and by how much
remains difficult because of the severity of the slump.
World Bank President Robert Zoellick said the global
economy is set to contract by close to 3 percent this year,
worse than a previous estimate of a 1.75 percent decline.
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European equities posted their highest close in five
months, propelled by banking stocks. The FTSEurofirst 300
<> index of top European shares ended 0.89 percent higher
at 887.78 points.
In the United States the Dow was poised to end the session
at break-even for the year, as it staged a further comeback
after hitting a decade-low in March that had seen the bluechip
index fall 25 percent since the start of the year.
At 1 p.m., the Dow Jones industrial average <> was up
95.15 points, or 1.09 percent, at 8,834.17. The Standard &
Poor's 500 Index <.SPX> was up 12.46 points, or 1.33 percent,
at 951.61. The Nasdaq Composite Index <> was up 16.52
points, or 0.89 percent, at 1,869.60.
Oil- and commodity-related stocks led the Dow higher, with
Chevron Corp <CVX.N> rising 2.6 percent.
"The rise in oil prices has been helping because the market
is so heavily weighted to energy stocks. Eventually it is going
to hurt, but right now it is helping," said Todd Leone, head of
listed trading at Cowen & Co in New York.
The International Energy Agency said it revised its outlook
for global oil demand higher for the first time since August,
helping crude prices extend a three-day rally to hit an
intraday high of $73.12 a barrel.
Analysts cautioned, however, that commodity prices may have
risen too far, too fast.
"Although we have been bullish on most metals for some time
now, with aluminum being the exception ... we are getting
somewhat more wary about prices at these levels," said Edward
Meir, an analyst at MF Global.
The dollar fell broadly, with a basket of major currencies,
the U.S. Dollar Index <.DXY>, down 1.10 percent at 79.391.
The euro <EUR=> was up 1.13 percent at $1.4124, and against
the yen, the dollar <JPY=> was down 0.89 percent at 97.33.
Commodity-linked currencies like the Australian and New
Zealand dollars soared.
Gold held steady in Europe, supported by the weaker dollar
and strong oil prices, but the market was restrained as fund
interest in bullion softened.
Spot gold prices <XAU=> rose $7.05 to $960.70 an ounce.
U.S. Treasury prices rallied, with 30-year debt extending
gains considerably after a solid auction of $11 billion in long
bonds.
The 30-year long bond <US30YT=RR> rose 1-17/32 in price to
yield 4.67 percent, while the benchmark 10-year U.S. Treasury
note <US10YT=RR> gained 26/32 in price to yield at 3.84
percent.
The rising oil prices powered a sharp rise in
commodity-related shares overnight in Asia.
Japan's Nikkei share average <> poked above the
psychologically key 10,000 mark to an eight-month high but
closed down 0.1 percent over U.S. interest rate worries.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.5 percent,
(Reporting by Richard Valdmanis, Edward Krudy Steven C.
Johnson and Ellen Freilich in New York; Ian Chua, Emelia
Sithole-Matarise, Kylie MacLellan, Jan Harvey, Rebekah Curtis
and Pratima Desai in London; Blaise Robinson in Paris; writing
by Herbert Lash; Editing by Leslie Adler)
