* Global stocks rally as economic data boosts sentiment
* Oil slides as U.S. crude inventories hit 16-year high
* Bonds flat to down as stock gains undercut safety bid
* Dollar rises vs euro on expectations ECB to cut rates
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 1 (Reuters) - Global stocks rallied on
Wednesday after U.S. home sales and manufacturing data provided
a bit of hope that a deep recession is moderating, but oil fell
as 16-year highs in U.S. crude inventories undercut that
sentiment.
The U.S. dollar rose against the euro on expectations the
European Central Bank would cut interest rates but it was
little changed against the yen as caution before a Group of 20
summit in London blunted news of more steep U.S. job losses.
Oil fell fell more than 4.0 percent at one point to below
$48 before paring some losses on news of more bearish economic
data and a surprising rise in U.S. crude inventories.
But prices for U.S. Treasuries were flat to slightly lower
as optimism on Wall Street that the downturn could be easing
weakened the bid for safe-haven U.S. government debt.
The private ADP survey showing nearly three-quarters of a
million U.S. job losses in March was supportive for bonds but
had little impact on debt or equity prices.
"The jobs numbers are pretty bad, but people have settled
into accepting that reality," said UBS currency strategist
Brian Kim in Stamford, Connecticut.
Investors found glimmers of hope in other economic data on
Wednesday.
Factory activity in March shrank, but at a slower pace than
the month before, while pending sales of existing homes rose
modestly in February. However, the housing market remained weak
as values continued to decline. For more see [].
"Some economic releases have hinted that perhaps the
economy is starting to form a bottom," said Derrick Wulf, a
fixed-income portfolio manager at Dwight Asset Management Co in
Burlington, Vermont.
"Any signs of labor market stability would certainly be
welcomed by the equity market and that should pressure
Treasuries," Wulf said.
Financial shares turned around following the manufacturing
and homes data as investors bet an improvement in the economic
outlook will boost financial activity.
JPMorgan Chase <JPM.N> rose 5.9 percent to $28.14 while
Bank of America <BAC.N> gained 3.4 percent to $7.05.
The Dow Jones industrial average <> closed up 152.68
points, or 2.01 percent, at 7,761.60. The Standard & Poor's 500
Index <.SPX> rose 13.21 points, or 1.66 percent, at 811.08. The
Nasdaq Composite Index <> added 23.01 points, or 1.51
percent, at 1,551.60.
In Europe, Barclays <BARC.L> rose 6.1 percent, Credit
Suisse <CSGN.VX> gained 5.9 percent and BNP Paribas <BNPP.PA>
added 5.5 percent. ING <ING.AS> rose 8.4 percent.
The FTSEurofirst 300 <> index of top European shares
closed 1.6 percent higher at 745.14 points.
Oil prices fell after the U.S. Energy Information
Administration reported a 2.8 million barrel rise in crude oil
inventories. Gasoline stockpiles increased by 2.2 million
barrels, counter to forecasts of a 1.4 million-barrel
decline.[]
"There is no indication in these numbers that the economy
is strengthening. It looks like more of the same," said Joseph
Arsenio, managing director at Arsenio Capital Management in
Larkspur, California.
U.S crude futures <CLc1> settled down $1.27 a barrel at
$48.39, eroding Tuesday's 2.6 percent gain. London Brent crude
<LCOc1> settled down 79 cents at $48.44.
Jessica Hoversen, a currency analyst at MF Global in
Chicago, called ADP "a really bad number" that bodes ill for
the government's more comprehensive jobs report on Friday.
But she said the G20 meeting and an expected ECB interest
rate cut on Thursday "will keep a lid" on price action.
The ECB is expected to cut interest rates to 1 percent on
Thursday, when the central bank might possibly announce
unconventional steps to boost economic growth.
Markets are on alert for any sign officials
The dollar was flat against a basket of major currencies,
with the U.S. Dollar Index <.DXY> break-even at 85.513.
The euro <EUR=> fell 0.15 percent at $1.323 from a previous
session close of $1.3250. Against the yen, the dollar <JPY=>
was down 0.26 percent at 98.58.
Spot gold prices <XAU=> rose $7.60, or 0.83 percent, to
$924.75 an ounce.
(Reporting by Leah Schnurr, Wanfeng Zhou, Ellen Freilich and
Edward McAllister in New York and Emelia Sithole-Matarise in
London and Peter Starck in Frankfurt; writing by Herbert Lash)
