* Bonds fall as slowing U.S. jobless claims cut safety bid
* Wall St gains as encouraging data offsets retail sales
* Oil jumps 3 pct to over $68 a barrel on U.S. jobs data
* Euro rises vs dollar after ECB leaves rates unchanged
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, June 4 (Reuters) - Oil prices rose more than 3
percent and Wall Street advanced on Thursday as hopes that the
U.S. economy is on the mend returned to the fore on encouraging
news about weekly jobless claims and business productivity.
The strength in U.S. stocks and signs of an improving
economy eroded the safe-haven appeal of U.S. government debt,
pushing the price of U.S. Treasuries lower.
The euro, meanwhile, rose against the U.S. dollar in
volatile trade after the European Central Bank kept a benchmark
interest rate unchanged at a record low 1.0 percent.
Gold rose as the dollar gave up gains versus the euro and
crude climbed above $68 a barrel, stoking fears of inflation.
Financial shares led U.S. stocks higher, with the economic
data offsetting disappointing May retail sales. The S&P retail
index <.RLX> fell 2.3 percent as 63 percent of retailers posted
same-store sales that fell short of Wall Street estimates,
according to data compiled by Thomson Reuters. For more see
[].
Investors had hoped for signs consumers were spending
again.
"A little bit of optimism has been built into those
(retail) stocks the past two weeks. That sector in particular
had moved meaningfully higher," said Kevin Kruszenski, head of
listed trading at KeyBanc Capital Markets in Cleveland.
At 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was up 33.76 points, or 0.39 percent, at 8,709.04. The
Standard & Poor's 500 Index <.SPX> was up 5.55 points, or 0.60
percent, at 937.31. The Nasdaq Composite Index <> was up
10.35 points, or 0.57 percent, at 1,836.27.
The number of U.S. workers filing new claims for jobless
benefits fell for a third straight week, government data
showed, indicating a slower deterioration of the job market.
European shares closed flat as gains in drugmakers and oil
producers were offset by weaker mining stocks and the ECB's
decision to keep interest rate unchanged.
The pound was lower against the dollar after the Bank of
England also left its benchmark rate unchanged.
"We may be bouncing about like a cork in the bath for a
while. We've made our surge forwards in the last three months
in a fairly dramatic fashion," said David Buik, senior partner
at BGC Partners in London. "The markets are recovering. (ECB
President Jean-Claude) Trichet says an economic recovery is on
the way. We'd love to believe him, but we're not sure we do."
The FTSEurofirst 300 <> of top European companies
closed down 0.2 percent at 866.56. The index moved in and out
of positive territory throughout the session.
The ECB said it expected recession in the euro zone to last
another year, and reiterated plans to buy 60 billion euros in
covered bonds across the region in both primary and secondary
markets.
At a news conference after the ECB's policy meeting Trichet
said it was important that Washington had expressed support for
a strong dollar, which helped mute losses in the greenback.
"Trichet's not giving an inch as far as encouraging any
loosening expectations," said Boris Schlossberg, director of FX
research at GFT Forex in New York.
"Some in markets wanted to see a hint of another 25
basis-point cut in the second half. He's admitted they'll have
negative growth this year but says it will recover in 2010."
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.2 percent at 79.33.
The euro <EUR=> was up 0.11 percent at $1.4166, and against
the yen, the dollar <JPY=> was up 0.66 percent at 96.55.
Oil rallied after Goldman Sachs raised its year-end
forecast to $85 a barrel from $65, and introduced a new
forecast of $95 for the end of 2010. []
U.S. crude for July delivery <CLc1> rose $2.74 to $68.86 a
barrel. London Brent crude <LCOc1> gained $2.88 to $68.76.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 29/32 in price to yield 3.65 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 2/32 to yield 0.93 percent.
Spot gold prices <XAU=> rose $14.65 to $976.80 an ounce.
Asian equities fell overnight from eight-month highs, led
by commodity-related shares, as investors followed a downturn
in U.S and European markets the day before.
The MSCI index of Asia Pacific shares outside Japan
<.MIAPJ0000PUS> slipped 1.9 percent and Japan's Nikkei <>
lost 0.75 percent.
(Reporting by Chuck Mikolajczak, Nick Olivari and Chris Reese
in New York and Brian Gorman, Kirsten Donovan, Ian Chua, Joe
Brock and Jan Harvey in London; Writing by Herbert Lash;
Editing by James Dalgleish)
