* Global stocks rally for fifth day on banking optimism
* Euro hits 5-week high versus dollar as safe-havens wane
* Bonds, gold also fall as higher stocks erode safety bid
(Recasts with U.S. markets, changes dateline; previous
LONDON)
By Herbert Lash
NEW YORK, March 16 (Reuters) - Optimism over a semblance of
stability in banking shares lifted stocks around the world for
a fifth straight session on Monday, and took the wind out of a
safety bid that had been driving gold, bonds and the dollar.
The euro hit a five-week high against the U.S. currency,
while U.S. and euro zone government debt prices fell and gold
slipped more than 1.0 percent as the worldwide equity rally
diminished the appeal of safe-haven assets.
Oil rose to more than $47, reversing earlier losses, on the
view that production cuts by the Organization of Petroleum
Exporting Countries had started to take effect. Crude also were
buoyed by hopes of economic recovery in equity markets.
[]
Asian stocks began the rally, hitting a one-month high, as
reassurances over the health of the U.S. banking industry
sparked a broad recovery in investors' appetite for risk.
Banking shares on either side of the Atlantic got a boost
after Britain's Barclays <BARC.L> became the latest bank to say
it began 2009 on a strong footing, echoing a refrain heard from
the executives of major U.S. banks last week.
"The equity market gains are really feeding risk appetite,"
said Dan Cook, senior analyst at IGM Markets in Chicago. "But
while we've had a good run for a few days, there's still not
much good news, so we're vulnerable to a reversal."
Global stocks as measured by MSCI's all-country world index
<.MIWD00000PUS> rose more than 2.1 percent, bringing gains to
more than 11 percent since hitting a low a week ago.
Equity markets shrugged off more dismal economic data and
news that a record $148.9 billion in net overall capital
outflows were recorded in January, the U.S. Treasury said.
[]
The outflows are a worrying development at a time when the
government is rolling out a massive spending plan to break a
14-month recession.
But comments from Federal Reserve Chairman Ben Bernanke on
the CBS program "60 Minutes" on Sunday that the U.S. recession
could probably come to an end this year and "we'll see recovery
beginning next year" overshadowed the news. []
Shares in Barclays surged almost 23 percent, while
Citigroup <C.N> gained 35 percent.
"Barclays was reiterating what we got from Citi, Bank of
America and JPMorgan last week in that their business looks
good," said Stephen Massocca, managing director at Wedbush
Morgan in San Francisco.
"We got what was generally considered to be a great
performance from Ben Bernanke on TV last night, and a
combination of those two has got the market moving with
financials leading the way."
After 1 p.m., the Dow Jones industrial average <> was
up 147.74 points, or 2.05 percent, at 7,371.72. The Standard &
Poor's 500 Index <.SPX> was up 16.33 points, or 2.16 percent,
at 772.88. The Nasdaq Composite Index <> was up 7.75
points, or 0.54 percent, at 1,439.25.
Banks also pushed European shares higher, with the
pan-European FTSEurofirst 300 <> index of top shares was
up 2.4 percent higher at provisional close at 719.10 points.
Despite the gains investors are skittish about whether the
stock rally can last, said Darren Winder, strategist at
Cazenove in London.
"I think this is a strong rally, but the corporate and
macro newsflow is still quite poor so understandbly people are
questioning whether we see some retrenchment of these gains,"
Winder said.
"We are probably going to run into some profit-taking in the
near term," he said.
The benchmark 10-year U.S. Treasury note <US10YT=RR>
fell21/32 to yield 2.97 percent. The 2-year U.S. Treasury note
<US2YT=RR> fell 3/32 to yield 1.01 percent.
The euro <EUR=> rose 0.74 percent at $1.3017.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.59 percent at 86.732.
Against the yen, the dollar <JPY=> rose 0.32 percent at 98.26.
A production outage in Nigeria and security concerns about
Iran also helped crude prices to reverse a 5 percent fall that
was triggered by an OPEC decision on Sunday to leave existing
output targets unchanged.
U.S. light sweet crude oil <CLc1> rose $1.12 to $47.37 a
barrel.
Spot gold prices <XAU=> fell $7.65 to $919.55 an ounce.
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose almost 2 percent, driven by the jump in
financial shares.
Japan's Nikkei average <> rose 1.8 percent, lifting it
further away from a 26-year closing low hit last week.
(Additional reporting by Ellis Mnyandu, Steven C. Johnson, and
Chris Reese in New York; writing by Herbert Lash)
