* US dollar up on euro-zone weakness, rising bond yields
* US Treasury bonds fall as critics question Fed's plan
* Global stocks rise on mergers and acquisitions
(Updates with European markets' close)
By Manuela Badawy
NEW YORK, Nov 15 (Reuters) - The U.S. dollar climbed to a
six-week high against major currencies on Monday as worries
about Ireland's debt crisis persisted, hurting the euro, while
rising U.S. bond yields increased the greenback's appeal.
In the global equity markets, stocks got a boost from
proposed acquisitions in the mining and auto sectors.
A rise in the 10-year U.S. Treasury note's yield to a
three-month high buoyed the dollar, as investors sold bonds
following news that a group of Republican economists and
financial services executives will launch a campaign this week
urging the Federal Reserve to drop the plan to buy $600
billion of Treasuries. For details, see []
Increased criticism of the Fed's monetary policy, ranging
from leading officials of countries such as Russia and China
to some Republican lawmakers and economists, reinforced the
inclination to sell Treasuries and take profits before year
end.
U.S. data showed U.S. retailers' sales rose more than
expected in October, suggesting the economic recovery was on
track. But a separate report showed an index of manufacturing
in New York State fell in November to its lowest since April
2009 after new orders and shipments tumbled. []
and [].
"The recovery in the dollar had been driven by consistent
surprises in U.S. data over the past two weeks and the
disappointing Empire State survey reminded traders that the
recovery in the U.S. economy is still uneven," said Kathy
Lien, director of currency research at GFT in New York.
But she said the dollar should recoup its initial losses
as consumer spending is the U.S. economy's main driver.
The U.S. Dollar Index <.DXY>, which measures the dollar's
performance against a basket of major currencies, rose 0.45
percent to 78.435, after earlier rising as high as 78.629. It
has now recouped all losses made after the Fed's Nov. 3
announcement for a second round of quantitative easing.
The euro <EUR=> fell 0.52 percent to $1.3619, while the
dollar gained 0.29 percent to 82.74 yen <JPY=>, after having
earlier touched 83.28 yen on trading platform EBS.
Investors sold the euro as Ireland struggled to convince
them it was in control of its debt problems, leaving open the
possibility of a bailout. []
The euro has taken a hit in the past week as Irish bond
yields have jumped on the country's struggles to control its
spiraling debt.
The debt-laden country is fully funded for 2010, but Irish
press reports said on Monday it was considering asking for
money for its banks, and other European governments were keen
to avoid a contagion to other peripheral countries.
"A lot of this is going to depend on how severe this whole
euro-zone crisis becomes. Everybody is really focused on the
Wednesday meeting with euro-zone finance ministers," said
Boris Schlossberg, director of currency research at GFT in New
York.
"If they can't come up with some tangible resolution to
the Irish problem, then the dollar definitely gets the benefit
risk-aversion flows," he added.
M&A LIFTS STOCKS
U.S. stocks rose as two large proposed acquisitions
suggested that investors see value in certain stocks at
current elevated levels in a trend that could carry the market
through year end.
The Dow Jones industrial average <> climbed 84.54
points, or 0.76 percent, to 11,277.12. The Standard & Poor's
500 Index <.SPX> gained 7.31 points, or 0.61 percent, to
1,206.52. The Nasdaq Composite Index <> rose 12.47
points, or 0.50 percent, to 2,530.68.
Caterpillar Inc <CAT.N> agreed to buy mining equipment
maker Bucyrus International Inc <BUCY.O> for $7.6 billion,
pushing Bucyrus' shares up almost 29 percent to $89.76.
Caterpillar, a Dow component, rose nearly 3 percent to $83.45.
For details, see []
The FTSEurofirst 300 index<> of top European shares
gained 0.75 percent, after falling for three straight
sessions. European stocks rallied on news that German truck
maker MAN SE <MANG.DE> and Sweden's Scania <SCVb.ST> were in
talks over a possible merger, in a move that could result in
Volkswagen <VOWG.DE> taking full control of both.
[]
Japan's Nikkei <> gained 1.1 percent to close at
9,827.51, near a 4-1/2-month high hit last week, helped by a
weaker yen and better-than-expected Japanese growth data for
the third quarter.
MSCI's all-country world stock index <.MIWD00000PUS> was
up 0.3 percent.
Persistent concerns that China will raise interest rates
further also spurred selling of riskier assets as traders
worried policy tightening will curb the robust demand of the
the world's second-largest economy for commodities and other
imports.
U.S. Treasuries fell as dealers and investors closed out
more bets tied to the Federal Reserve's $600 billion bond-
purchase program, known as QE2.
On Monday, the Fed bought $7.92 billion in Treasury debt
maturing between September 2016 and November 2017, in another
purchase that's part of its second round of quantitative
easing, or QE2. On Friday, the Fed bought $7.23 billion in
Treasury paper maturing in four to six years -- the first of
$600 billion in asset purchases the U.S. central bank said it
would make in an effort to help stimulate the sluggish
economy.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 9/32, with the yield at 2.825 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 1/32 with the yield at 0.50
percent. The 30-year U.S. Treasury bond <US30YT=RR> was down
2/32, with the yield at 4.298 percent.
In the energy and commodity markets, U.S. crude oil
futures <CLc1> rose 26 cents, or 0.3 percent, to $85.14 per
barrel, and spot gold <XAU=> rose $2.66, or 0.19 percent, to
$1,371.00 an ounce, steadying after its biggest one-day fall
since July 1 the previous session.
Gold's drop from last week's record $1,424.10 an ounce was
on concern the market had become overbought and as talk of
China's potential interest-rate rise knocked commodity prices
sharply lower.
(Reporting and writing by Manuela Badawy; Additional
reporting by Wanfeng Zhou, Ellen Freilich, and Ryan
Vlastelica in New York and Michael Rose in London; Editing by
Jan Paschal)
