* Stocks extend last week's rally on risk appetite
* Oil rises on recovery hopes, signs of China demand
* Dollar holds ground vs euro on hopes for U.S. recovery
* Bond prices rise as investors bargain hunt after rally
(Updates with close of European markets)
By Herbert Lash
NEW YORK, Aug 24 (Reuters) - European and Asian stocks
extended last week's rally on Monday and crude oil marched
higher after U.S. economic news and stronger-than-expected data
from the euro zone spurred expectations for economic recovery.
But an early rally in U.S. stocks faded about midday in New
York after Treasuries rose as investors swooped in to take
advantage of sharp losses on Friday.
Oil rose to a 10-month high near $75 a barrel and other
commodities also surged as optimism that major economies were
pulling out of recession drove hopes of rebounding demand.
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Global stocks as measured by MSCI's all-country world index
<.MIWD00000PUS> rose 1.2 percent and was on track for a fifth
straight session of gains.
The yen fell while the U.S. dollar slid against commodity
currencies, such as the Australian and New Zealand dollars, as
investors became more comfortable with riskier trades given the
upbeat assessment of the world economy. []
"Economic data is in favor of a stronger recovery than
expected. We can be quite bullish on risky assets," said Romain
Boscher, head of equity management at Groupama Asset
Management.
Euro zone industrial new orders in June rebounded 3.1
percent month-on-month, or more than expected, the European
Union statistics office Eurostat said. []
In the United States, economic activity improved again in
July from extremely weak levels earlier this year, suggesting
the recession is waning, a report from the Federal Reserve Bank
of Chicago showed. []
In addition, China's latest data for July indicated that
while growth was moderating after a strong second quarter, the
recovery remained on track to achieve the government's goal of
8 percent growth for the full year. []
"The Chinese news was good and we had some positive news
out of Europe as well," said Rob Montefusco, a trader at Sucden
Financial in London. "Technicals are pointing upwards." []
But U.S. stocks pared earlier gains. About 1 p.m. (1300
GMT), the Dow Jones industrial average <> was up 15.34
points, or 0.16 percent, at 9,521.30. The Standard & Poor's 500
Index <.SPX> was up 1.11 points, or 0.11 percent, at 1,027.24.
The Nasdaq Composite Index <> was down 1.49 points, or
0.07 percent, at 2,019.41.
European shares hit their highest closing level in nearly
10 months, boosted by banks and miners.
The FTSEurofirst 300 <> index of top European shares
ended 0.9 percent up at 975.19 points, the highest closing
level since early November.
Banks were among top gainers, with DJ STOXX banking index
<.SX7P> rising 1.8 percent.
Japan's Nikkei average <> jumped 3.4 percent, booosted
by hopes for a global recovery and lifted by camera maker Canon
Inc <7751.T> and other exporters.
Investors increased their risk-taking in the wake of
stronger-than-expected U.S. existing home sales data and upbeat
comments from Federal Reserve Chairman Ben Bernanke.
Copper prices rose to their highest in more than a week,
helped by strong investment demand and bets the economic crisis
is petering out.
Jesper Dannesbee, a senior commodities strategist at
Societe General, said real demand has not improved that much it
but will improve gradually through the year.
"This is follow through from Friday. There is a general
appetite for risky assets driven by cheap money and lax
monetary policy," Dannesbee said.
Gold edged below $950 an ounce, under pressure from a
firmer dollar, but remained rangebound as support from higher
oil prices and investor demand prevented it falling further.
Spot gold <XAU=> was at $949.80 per ounce
U.S. Treasury debt prices rose, with the 30-year bond
gaining more than a full point, as investors did some bargain
hunting after Friday's sharp losses and after the Federal
Reserve bought government debt. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
19/32 in price to yield about 3.49 percent.
Benchmark euro zone government bonds ended flat as data
bolstered the recovery view, but caution on its sustainability
eased the selling pressure. []
"The stock market has been the barometer for growth and
potential inflation," said Troy Buckner, managing principal of
NuWave Investment Management in Morristown, New Jersey. "And
yes. it's been an extreme correlation between equity market
movements and commodities, especially copper, aluminum and
crude oil."
But Buckner said that prices have climbed "too far too
fast," leading his firm to short crude and heating oil, while
reducing long positions in copper and aluminum.
Euro zone government bonds ended flat as economic data
bolstered the view the global economic recovery is under way
but caution about the recovery eased selling pressure.
Investors worried whether new U.S. debt issuance this week
would be welcomed by buyers. []
U.S. crude <CLc1> rose 51 cents to $74.40 a barrel.
(Reporting by Ryan Vlastelica, Gertrude Chavez-Dreyfuss, Chris
Reese in New York; Jamie McGeever, Atul Prakash, Alex Lawler
and Ian Chua in London and Richard Valdmanis in Portland,
Maine; writing by Herbert Lash)
