* Global stocks gain on better economic recovery sentiment
* Oil rises more than $2 after fresh Nigeria attacks
* Dollar edges up on China's foreign reserve comments
* U.S., euro zone bonds rise in continued auction relief
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 29 (Reuters) - Crude oil prices gained more
than 3 percent on Monday after news of fresh rebel attacks on
installations in Nigeria, while global stocks rallied on
renewed hopes of economic recovery and rising energy shares.
The U.S. dollar fell against the euro and the yen weakened
as both the rise in oil prices and U.S. stocks reduced the
safe-haven demand for the two currencies.
U.S. Treasury prices extended last week's rally, meanwhile,
as investors squared away positions and tried to improve their
holdings before the month and second quarter end on Tuesday to
try to improve their holdings.
Benchmark yields on U.S. Treasuries slipped to their lowest
in a month as prices for government debt on both sides of the
Atlantic rose on continued relief over the strong demand for
the recent heavy slug of new debt that has been sold.
Copper rose to a two-week high as investors bet the worst
of the economic downturn had passed,
"Commodities are really the big story of the day. We've had
the Nigerian oil field attack, which has seen oil spike and
that's really driven up the stock market," said Dan Cook,
market analyst at IG Markets in Chicago.
"With stocks up, investors are selling the dollar against
the euro especially. The yen is also down sharply with equities
trading higher."
The rise in crude oil also bolstered both U.S. and European
energy shares. Exxon Mobil Corp <XOM.N> rose 2.2 percent, Royal
Dutch Shell <RDSa.L> added 1.8 percent and Total <TOTF.PA>
gained 2.5 percent.
Economic news also provided a boost to global equity
markets, as euro zone economic sentiment improved more than
expected in June, data showed. For more see [].
Japanese industry output rose for the third month in a
row.
A surge in Shanghai stocks <> to a one-year closing
high for the fourth straight session on signs of Chinese
economic recovery also bolstered investor sentiment.
The Dow Jones industrial average <> rose 90.99 points,
or 1.08 percent, at 8,529.38. The Standard & Poor's 500 Index
<.SPX> added 8.33 points, or 0.91 percent, at 927.23. The
Nasdaq Composite Index <> gained 5.84 points, or 0.32
percent, at 1,844.06.
Comments from Chinese officials at a meeting of central
bankers in Basel, Switzerland, over the weekend helped
strengthen the dollar.
China's policy governing its $1.95 trillion in foreign
reserves -- the bulk of which are U.S. Treasuries -- was stable
and consistent with no "sudden changes," the country's central
bank governor Zhou Xiaochuan said. []
"Today's tacit reaffirmation of the dollar standard is a
sign of Chinese acknowledgment that for the time being the
greenback remains the primary manner for settling global trade
accounts," said Boris Schlossberg, director of currency
research at GFT Forex in New York.
The dollar had come under pressure recently as debate
intensified about the use of an alternative global currency to
the greenback, with China's central bank renewing its call for
a super-sovereign reserve currency last week.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.04 percent at 79.847.
The euro <EUR=> rose 0.23 percent to $1.4083, while against
the yen, the dollar <JPY=> was up 0.85 percent at 96.03.
Bonds rallied through much of last week. Yields fell after
three U.S. debt auctions totaling a record $104 billion of
notes saw above-average demand. Traders were relieved that the
global appetite for U.S. government debt did not wane in the
face of a deluge of supply.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
16/32 in price to yield 3.48 percent. The 2-year U.S. Treasury
note <US2YT=RR> was unchanged in price to yield 1.11 percent.
Nigeria's main militant group said its fighters had
attacked an oil facility belonging to Royal Dutch Shell in the
Niger Delta, days after President Umaru Yar'Adua proposed an
amnesty. []
Further support came as signs of life in overseas markets
renewed investor optimism about the prospects for an economic
recover. []
"Any time that we see the Dow Jones higher, the funds take
that as a sign that the economy is going to strengthen and that
oil demand will strengthen along with that," said Peter Beutel,
president of Cameron Hanover in New Canaan, Connecticut.
U.S. crude <CLc1> settled up $2.33 at $71.47 a barrel.
London Brent crude <LCOc1> settled up $2.07 at $70.99.
U.S. August gold futures <GCQ9> settled down 30 cents at
$940.70 an ounce in New York.
In Europe, the pan-European FTSEurofirst 300 <> index
of top shares closed up 1.8 percent at 859.63. The index fell
nearly 2 percent last week.
Worries over a slowdown in Chinese imports of copper put a
lid on gains. Copper for three-months delivery <MCU3> on the
London Metal Exchange traded at $5,160 a tonne from $5,035 on
Friday.
Asian stock markets retreated as weaker oil prices hit
energy shares. The MSCI index of Asia-Pacific shares outside
Japan <.MIAPJ0000PUS> slipped 0.4 percent in light trade, while
Japan's Nikkei average <> shed nearly 1 percent.
(Reporting by Caroline Valetkevitch, Edward McAllister,
Gertrude Chavez-Dreyfuss, Chris Reese and Frank Tang in New
York and Emelia Sithole-Matarise, Jon Hopkins, Rebekah Curtis
and Maytaal Angel in London; Writing by Herbert Lash; Editing
by James Dalgleish)
