* World equities rally after Q3 U.S. GDP expanded 3.5 pct
* U.S. economy posts first qtrly growth in over a year
* Dollar, Treasuries down; oil rises to near $80 a barrel
(Recasts; updates with U.S. markets close)
By Jennifer Ablan
NEW YORK, Oct 29 (Reuters) - World stocks rallied strongly
on Thursday after U.S. gross domestic product data showed the
world's biggest economy returned to growth last quarter
following the worst recession since the Great Depression.
The data showed the economy grew at an annual rate of 3.5
percent in the third quarter compared with a forecast for 3.3
percent, allaying fears of a prolonged slowdown. For details,
see []
Strategists and traders were surprised as some had been
downgrading their outlook after disappointing data in recent
days.
"The market was beginning to price in a weaker outlook, but
today's GDP report was good across the entire spectrum," said
John Spinello, chief Treasury strategist at Jefferies & Co in
New York.
For their part, top investors around the world rebuilt
equity holdings during a shaky October for stock markets on the
view that the economy would not fall back into recession given
accommodative central bank policies. []
The MSCI world index <.MIWD00000PUS> turned positive after
the data, rebounding from three-week lows on Wednesday, the
index's biggest one-day selloff since August. At the close, the
index was up about 1.62 percent.
Wall Street equities indexes also rallied. The Dow Jones
industrial average <> ended up 199.89 points, or 2.05
percent, at 9,962.58, while the Standard & Poor's 500 Index
<.SPX> was up 23.48 points, or 2.25 percent, to 1,066.11. The
Nasdaq Composite Index <> rose 37.94 points, or 1.84
percent, at 2,097.55.
In Europe, the FTSEurofirst 300 index <> jumped 1.76
percent, reversing earlier losses of around 0.2 percent.
Emerging market stocks <.MSCIEF>, which had suffered
heavily from this week's global shakeout and retreat from risk,
recovered from early losses to trade up 0.84 percent.
In energy and commodities prices, U.S. light sweet crude
oil <CLc1> rose $2.41, or 3.1 percent, to settle at $79.87 per
barrel, while spot gold prices <XAU=> rose $19.65, or 1.91
percent, to $1,046.50 per ounce.
The Reuters/Jefferies CRB Index <.CRB> was up 5.77 points,
or 2.13 percent, at 276.16.
BONDS VOYAGE
Treasury debt prices fell as the GDP figures suggested the
U.S. economy would emerge from recession faster and as stocks
advanced.
The benchmark 10-year U.S. Treasury note <US10YT=RR> slid
21/32 in price, with the yield at 3.4936 percent, while the
2-year U.S. Treasury note <US2YT=RR> was down 3/32, with the
yield at 0.9762 percent.
At the longer end of the yield curve, the 30-year U.S.
Treasury bond <US30YT=RR> was down 1-9/32, with the yield at
4.3335 percent.
In addition, the dollar eased against a basket of major
currencies. The U.S. Dollar Index <.DXY> was last at 75.983,
down 0.58 percent from a previous session close of 76.425.
The euro <EUR=> was up 0.81 percent at $1.4828 from a
previous session close of $1.4709. Against the Japanese yen,
the dollar <JPY=> was up 0.92 percent at 91.45 from a previous
session close of 90.620.
