* Strong China, US economic reports lift stocks, commodities
* ISM factory data for last month highest since May
* U.S. data lifts dollar against yen and euro
(Updates U.S. and European markets, adds analysts' quotes)
By Walker Simon
NEW YORK, Nov 1 (Reuters) - Stocks, commodities and the
dollar rose on Monday after manufacturing strengthened in the
United States and China, the world's two largest economies,
while gold and U.S. Treasury debt prices fell.
The pace of growth in U.S. manufacturing quickened in
October, suggesting a sluggish economic recovery may be gaining
some traction, according to an industry report. For details
see, [].
China's official purchasing managers' index, or PMI, for
manufacturing blew past expectations in October to hit a
six-month high. []. The benchmark Shanghai
Composite Index <> of shares rose 2.5 percent.
The dollar gained against the euro and yen after the
Institute of Supply Management said its index of U.S. factory
activity for last month rose to the highest since May and
separate data showed U.S. construction spending rose in
September to a one-year high.
The euro <EUR=> fell 0.46 percent against the dollar to
$1.3883. Against the Japanese yen, the dollar <JPY=> was up
0.34 percent at 80.66 yen.
The U.S. dollar index <.DXY>, which measures the greenback
against major currencies, rose 0.05 percent to 77.3016.
"The dollar is starting to rebound a little bit off the
better-than-expected ISM data. But we're still within the
ranges we have seen the last couple of days," said Greg
Michalowski, chief currency analyst at the New York-based
online broker FXDD.
The greenback came under pressure in past sessions against
most major currencies, albeit within recent ranges, as the
market geared up for the Federal Reserve to step up money
printing after its two-day policy meeting ends on Wednesday.
Reflecting gains in global equities markets, the MSCI's
all-country world stock index <.MIWD00000PUS> rose 0.37
percent.
The pan-European FTSEurofirst 300 <> index of top
shares rose 0.13 percent to close at 1,088.01 -- a near
one-week closing high. But the index had pared gains from
earlier in the session when it hit a high of 1,094.74 points.
A POSITIVE WIND ON WALL STREET
On Wall Street, the Dow Jones industrial average <> was
up 50.86 points, or 0.46 percent, at 11,169.35. The Standard &
Poor's 500 Index <.SPX> was up 4.64 points, or 0.39 percent, at
1,187.90. The Nasdaq Composite Index <> was up 3.83
points, or 0.15 percent, at 2,511.24.
"The (U.S.) data today reinforces that we have a
sustainable" U,S. expansion, said Henry Smith, chief investment
officer of Haverford Trust Co. in Philadelphia.
"It's good to see the market reacting to the positive data,
although our expectation is that ... this might be short-lived
because it has the feel that we're buying into the two big
pieces of news this week," he said referring to U.S. midterm
elections on Tuesday and the Fed's announcement on Wednesday.
Financial markets are gearing up for the Federal Reserve's
Wednesday announcement, expected to spell out how much it will
stimulate the economy via quantitative easing, a process
expected to involve the Fed's purchases of Treasury debt.
How much QE the Fed will do is a major uncertainty for
markets. A recent Reuters poll found most economists expect the
Fed to buy $80 to $100 billion in assets per month.
Adding to uncertainty are U.S. elections on Tuesday. Polls
show control of the U.S. House of Representatives is expected
to pass into Republican hands.
Bucking the global uptrend for equities: Japan's Nikkei
<> lost 0.52 percent to end at 9,154.72, a seven-week
closing low. During Tokyo's trading session, the yen briefly
jumped to nearly a record high against the dollar. A strong yen
hurts Japan's exporters' shares because it makes their goods
more expensive abroad.
CHINA SYNDROME LIFTS OIL
The data from China, which has a voracious appetite for oil
and is the world's biggest consumer of metals, helped lift
energy and commodities prices. More demand is anticipated from
China.
U.S. light sweet crude oil <CLc1> rose $2.02, or 2.49
percent, to $83.46 per barrel,
The Reuters/Jefferies CRB Index <.CRB>, a gauge of
commodities and energy prices, was up 0.53 percent,
But gold prices <XAU=> fell $5.70, or 0.42 percent, to
$1,353.30. A stronger dollar usually weighs on gold since the
precious metal, which is priced in greenbacks, becomes less
attractive to non-U.S. purchasers.
U.S. Treasuries fell after stronger-than-expected data on
manufacturing and construction spending bolstered stocks and
undermined the safe-haven appeal of government debt.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 8/32, with the yield at 2.638 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
0.3475 percent.
The 30-year U.S. Treasury bond <US30YT=RR> was down 18/32,
with the yield at 4.025 percent.
(Additional reporting by Lucia Mutikani in Washington , Chris
Reese, Caroline Valetkevitch, Gertrude Chavez-Dreyfuss, Steve
Johnson, Ed Krudy and Angela Moon in New York and Harpreet
Bhal, Writing by Walker Simon; Editing by Jan Paschal)
