* U.S., European shares rise on central bank funding moves
* Oil rebounds more than $2 as U.S. gasoline stocks drop
* Dollar rises broadly on unexpected U.S. jobs data
* U.S. government debt falls, but euro zone debt rises
(Recasts with U.S. markets, adds byline; dateline previous
LONDON)
By Herbert Lash
NEW YORK, July 30 (Reuters) - The dollar and global stocks
gained on Wednesday after U.S. and European central banks again
moved to ease persistent credit strains, although a resurgence
in oil prices knocked equities off early highs.
Oil rebounded after U.S. government data showed a drop in
gasoline stocks last week, surprising analysts who had expected
an increase.
A surprise gain in U.S. private sector payroll totals
pushed U.S. Treasury debt prices lower. The prospect of an
increased supply of longer-maturity debt and the extra
liquidity provisions for banks also helped push bond prices
down.
But euro zone government bonds rose, with 10-year futures
reaching their highest level in nearly two weeks, on
end-of-month buying and weak economic data from the region.
U.S. and European stock markets drew support from the
liquidity move by the Federal Reserve, and European and Swiss
central banks.
"The Fed has expanded its measures and it signals very
clearly that it will do everything to support the financial
system," said Rainer Sartoris, an economist at HSBC Trinkaus.
"This has a positive impact on the stock markets. Investors
are now hoping again for more stability," he added.
Bank shares rallied on the move, although they pared
initial strong gains.
U.S. securities regulators also extended through Aug. 12 an
emergency rule aimed at curbing abusive short selling in the
shares of 19 financial firms, including battered U.S. mortgage
finance companies Fannie Mae <FNM.N> and Freddie Mac <FRE.N>.
Shares of Fannie and Freddie initially rose more than 7
percent, but later pared most of those gains.
Before 1 p.m., the Dow Jones industrial average <> was
up 37.86 points, or 0.33 percent, at 11,435.42. The Standard &
Poor's 500 Index <.SPX> was up 3.34 points, or 0.26 percent, at
1,266.54. The Nasdaq Composite Index <> was down 8.54
points, or 0.37 percent, at 2,311.08.
European shares rose sharply on the central banks' efforts
to boost emerging bank funding, and on upbeat results from
industrial bellwethers ArcelorMittal <ISPA.AS> and Siemens
<SIEGn.DE>.
ArcelorMittal <MTP.PA><ISPA.AS>, the No. 1 steelmaker,
reported record second-quarter earnings that easily exceeded
expectations as it managed to raise prices and offset raw
material costs.
Its shares rose 8.5 percent and were the strongest positive
weight in the pan-European FTSEurofirst 300 index <>,
which ended up 1.6 percent at 1,180.75 points.
"The corporate results are on balance still a little better
than expected. Profitability has clearly deteriorated but it's
not the utter and complete disaster people expected," said Mike
Lenhoff, chief strategist and head of research at Brewin
Dolphin Securities.
Oil rebounded. The U.S. Energy Information Administration
said gasoline inventories fell by 3.5 million barrels compared
with forecasts of a 200,000 barrel build, as U.S. gasoline
production dropped and imports fell.
Analysts also said data was bearish, with crude stocks
dropping less than expected and with distillates increasing
more than anticipated. But "the report offers the bulls more
potential than they have had over the last few weeks," said Rob
Kurzatkowski, futures analyst at OptionsXpress in Chicago.
U.S. light sweet crude oil <CLc1> rose $2.67 to $124.86 abarrel.
New York gold futures dropped 2.3 percent to a one-month
low, while silver slipped below $17 an ounce as the dollar's
rise and and strong equities prompted selling.
Spot gold prices <XAU=> fell $11.85 to $905.00 an ounce.
The dollar rose broadly on a report showing that the U.S.
private sector unexpectedly added jobs in July, and on poor
euro-zone sentiment data, which provided further evidence of
rapidly deteriorating economic conditions in Europe.
An economic sentiment survey from the European Commission
skidded in July to its lowest since March 2003.
The ADP employment report raised prospects of improved
non-farm payrolls data, set for release on Friday, but analysts
said ADP is not a highly reliable indicator of what might
happen to non-farm payrolls.
"The ADP number is bullish for the U.S. dollar especially
in an environment where we've seen in the last few weeks U.S.
data surprising on the upside," said Matthew Strauss, senior
currency strategist at RBC Capital Markets in Toronto.
The ADP National Employment Report showed companies added
9,000 jobs in July, compared with a revised 77,000 drop in
June. Analysts polled by Reuters had forecast a 60,000 fall.
The dollar rose against the yen <JPY=>, up 0.03 percent at
108.07, and was slightly highter against major currencies, with
the U.S. Dollar Index <.DXY> up 0.01 percent at 73.274.
The euro <EUR=> fell 0.03 percent at $1.5584.
Stocks overnight in Asia rose on a decline in oil prices
and a rebound in U.S. bank shares. Japan's Nikkei average
<> closed up 1.6 percent while stocks elsewhere in Asia,
gauged by MSCI's index, rose 1.5 percent <.MIAPJ0000PUS>.
(Reporting by Lucia Mutikani, Richard Leong and Frank Tang in
New York and Santosh Menon, Ian Chua and Eva Kuehnen in
London)
(Writing by Herbert Lash. Editing by Richard Satran)
