(Recasts with U.S. markets, changes byline and dateline;
previous LONDON)
* Strong U.S. retail sales in May buoys sentiment
* InBev takeover bid also spurs U.S., European stocks
* Oil prices retreat, retail sales batter debt prices
By Herbert Lash
NEW YORK, June 12 (Reuters) - Oil prices slid and U.S. and
European stocks rallied on Thursday as InBev's $46 billion bid
for brewer Anheuser-Busch and a jump in U.S. retail sales at
twice the expected rate in May buoyed investor sentiment.
Government debt prices fell after the rise in the retailing
data revived bond investors' fears of inflation. A Federal
Reserve official's warning about rising consumer prices also
heightened concern that U.S. interest rates will be hiked.
The expectations of higher rates fueled demand for dollars
and pushed down other currencies, putting the euro on track for
its worst week against the U.S. currency in three years.
Crude oil fell about $3 a barrel as the dollar
strengthened. The currency's gain was attributed to the
stronger sales figures, up 1 percent in May as cash from the
government's recession-fighting campaign hit checkout
counters.
"The retail sales number told us that maybe the Fed has got
it right here, the economy is not doing as poorly as we
thought," said Frank Lesh, an analyst and broker at FuturePath
Trading LLC in Chicago. "Some of those rebate checks are
getting spent."
Equity market advances on either side of the Atlantic were
broad based as the strength of consumer spending helped calm
investor worries about the profit outlook.
The financial sector led the advance after news that
investment bank Lehman Brothers <LEH.N> replaced both its chief
financial officer and chief operating officer. The S&P
financial sector index <.GSPF> was up 3.3 percent, with Lehman
shares were up 2 percent to $24.23 in heavy trading.
Caterpillar<CAT.N>, which rose more than 3 percent and
plane maker Boeing's <BA.N> nearly 3 percent rise, were among
the biggest U.S. gainers.
Before 1 p.m., the Dow Jones industrial average <> was
up 150.22 points, or 1.24 percent, at 12,233.99. The Standard &
Poor's 500 Index <.SPX> was up 14.09 points, or 1.06 percent,
at 1,349.58. The Nasdaq Composite Index <> was up 31.16
points, or 1.30 percent, at 2,425.17.
European shares also rallied, snapping six days of
declines, as banks and mining stocks rose.
"We're up because there has been no bad news, we've had a
bit of respite from the ongoing doom and gloom," said IG Index
chief market analyst David Jones.
"At the moment it smells like an oversold rally so (the
market) was going to come back at one point after the plunges
we've seen this week, but I don't think anyone is too convinced
as of yet."
The FTSEurofirst 300 index <> of top European shares
rose 0.93 percent to close at 1,261.02 points.
Royal Bank of Scotland <RBS.L> rose 7.4 percent, HSBC
<HSBA.L> gained 1.3 percent and BNP Paribas <BNPP.PA> and
Spain's BBVA <BBVA.MC> both rose 2.9 percent, respectively.
InBev <INTB.BR> jumped 6.2 percent to 50.21, and Anheuser
Busch rose 5.7 percent on the Belgian brewer's unsolicited
bid.
U.S. gold futures unwound day-earlier gains, dropping to
levels last seen on March 2, as crude oil prices reversed
course to fall. Spot gold prices <XAU=> fell $14.60 to
$864.95.
Japan's Nikkei share average <> fell 2 percent, while
the MSCI index of Asia-Pacific equities excluding Japan
<.MIAPJ0000PUS> was off 2.4 percent to the lowest since March
25.
(Reporting by Ellis Mnyandu, Nick Olivari, John Parry, Gene
Ramos and Carole Vaporean in New York and Ian Chua, Kirsten
Donovan and Amanda Cooper in London)
(Reporting by Herbert Lash)
(herb.lash@thomsonreuters.com; +1 646 223 6019; Reuters
Messaging:
herb.lash.reuters.com@reuters.net. Editing by Richard Satran)
