* U.S., European factory data lift sentiment
* Oil rises above $92 a barrel on growth expectations
* Dip in Chinese PMI relieves fears of more tightening
* Euro falls on persistent European debt concerns
(Updates with U.S. markets' close)
By Walter Brandimarte
NEW YORK, Jan 3 (Reuters) - World stocks rallied in the
first trading session of 2011 on Monday on stronger global
manufacturing data, while oil closed at a 27-month high as the
improved growth outlook increased demand expectations.
U.S. Treasuries prices fell as the manufacturing numbers --
which followed positive U.S. economic data last week --
suggested the world recovery continues to gain momentum,
encouraging investors to take on more risk.
The Institute for Supply Management said U.S. manufacturing
grew for a 17th straight month following news of faster growth
in European manufacturing as well. For details, see
[] [].
In another recent positive report, China's factory
inflation slowed in December, removing some pressure from the
Chinese central bank to slow the economy. [].
The three main U.S. stock indexes jumped more than 0.8
percent on the data, back to September 2008 levels before the
fall of Lehman Brothers. Asia was also headed to a positive
start, with Japan's Nikkei futures <NKH1> traded in Chicago
rising 135 points to 10,365.
"There is a lot of money in cash, a lot of money in bonds
that would like out of bonds. It's only natural, with the
economic improvement, it's finding its way to equities," said
Stephen Massocca, managing director at Wedbush Morgan in San
Francisco.
The big test for the U.S. economy comes on Friday, when the
government will publish its widely watched nonfarm payrolls
report.
The Dow Jones industrial average <> ended up 93.24
points, or 0.81 percent, at 11,670.75, while the Standard &
Poor's 500 Index <.SPX> jumped 14.25 points, or 1.13 percent,
to 1,271.89. The Nasdaq Composite Index <> closed up 38.65
points, or 1.46 percent, at 2,691.52.
In Europe, the the FTSEurofirst 300 index <> of top
stocks finished 0.95 percent higher at 1,132.30 on a broad
rally, led by construction and industrial shares. Trading was
thin, with markets closed in Britain and parts of Asia.
The MSCI All-Country World Index <.MIWD00000PUS> rose 0.67
percent, after finishing 2010 with gains of 10 percent, back to
its strongest level since September 2008.
Emerging market stocks jumped 1.05 percent, according to
another MSCI index <.MSCIEF>.
Oil extended its rally on optimism the global economic
recovery was gaining momentum. U.S. crude futures <CLc1> rose
17 cents to $91.55 a barrel, their highest close since Oct. 3,
2008.
EURO STARTS LOWER
The euro started the first trading day of 2011 lower and
analysts said it is likely to extend its downtrend as investors
avoided the single currency due to nagging concerns about the
euro-zone debt crisis.
"The euro is trading with a heavier tone. I think traders
are trying to cut back their exposure on the euro as volumes
normalize and given continued problems in the euro zone," said
Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington.
The euro <EUR=> was down 0.13 percent at $1.3359 from a
previous session close of $1.3377, after hitting a session low
around $1.3251.
The dollar rose 0.19 percent against a basket of major
currencies, according to the U.S. Dollar Index <.DXY>. Against
the Japanese yen, it <JPY=> gained 0.71 percent at 81.73.
Also supporting dollar gains was a rise in U.S. Treasury
yields resulting from investors' renewed appetite for risk.
The benchmark 10-year U.S. Treasury note <US10YT=RR> lost
12/32 in price, sending its yield up to 3.3343 percent.
Gold prices closed 0.38 percent lower at $1,414.00.
(Additional reporting by Chuck Mikolajczak, Gertrude
Chavez-Dreyfuss, and Emily Flitter in New York, Nigel
Stephenson in London; Editing by Kenneth Barry and Dan
Grebler)
