* World stock markets rise as economic data lifts optimism
* Dollar struggles after sinking to year low versus euro
* Oil over $68 after 30 pct jump in May on dollar's slump
* Bonds plunge as data, stocks undermine safety bid
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, June 1 (Reuters) - World stocks and oil soared to
2009 highs on Monday while the U.S. dollar slipped to lows for
the year as factory activity from China to Europe to the United
States suggested the global recession is easing.
The dollar's slide against a basket of currencies and the
euro sparked a rally in commodities, with copper and oil
jumping to seven-month highs. Crude rose above $68 a barrel.
U.S. and euro zone debt fell after data that showed
improving economies around the world bolstered optimism about a
sustained global recovery and boosted demand for risky assets.
The U.S. manufacturing sector contracted at a slower rate
in May, while U.S. consumer spending fell modestly in April.
China said industrial activity expanded in May and surveys in
Europe showed the manufacturing recession was easing.
"The market continues to buy the recovery story, as
economic data suggests that the worst is behind us," said David
Thurtell, an analyst at Citigroup.
"In my view, this is more evidence that we're getting
closer to the end of the recession," said Michael Darda, chief
economist at MKM Partners LLC in, Greenwich, Connecticut. He
referred to the Institute for Supply Management's index of U.S.
manufacturing, which rose more than expected in May.
European shares hit their highest close since January 6,
with energy companies and miners among the biggest gainers.
U.S. stocks rose sharply despite General Motors Corp's <GM.N>
filing for bankruptcy, the third-largest in U.S. history.
Once an icon of American industry, GM was removed from the
30-stock Dow and delisted by the New York Stock Exchange.
About 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was up 216.25 points, or 2.54 percent, at 8,716.58. The
Standard & Poor's 500 Index <.SPX> was up 24.23 points, or 2.64
percent, at 943.37. The Nasdaq Composite Index <> was up
50.00 points, or 2.82 percent, at 1,824.33.
Major industrials led the rise in the Dow, with shares of
airplane manufacturer Boeing <BA.N> up 5.5 percent, while basic
resources also gained, including aluminum producer Alcoa Inc
<AA.N>, up more than 7.9 percent.
"What this (data) means is things aren't really getting
worse and I guess that is good enough for a rally," said Kim
Caughey, senior investment analyst at Fort Pitt Capital Group
in Pittsburgh.
In Europe, Anglo American <AAL.L> jumped 7.5 percent, Rio
Tinto added <RIO.L> 6.5 percent and Xstrata <XTA.L> gained 10.5
percent. Steelmaker ArcelorMittal <ISPA.AS> surged 10 percent.
The FTSEurofirst 300 <> index of top European shares
rose 2.8 percent to 886.27 points.
Oil rose more than 2 percent, extending its biggest monthly
gain in a decade last month as the weaker dollar boosted
investor demand for oil and commodities.
"It's the dollar and equities," said Christopher Bellew, a
broker at Bache Commodities. "It's maybe not so surprising if
there is a chance of seeing some economic recovery and
increased demand for oil."
U.S. light sweet crude oil <CLc1> rose $1.57 to $67.88 a
barrel after hitting a session high of $68.29.
Spot gold prices <XAU=> rose $2.25 to $981.25 an ounce.
Commodity-related currencies such as the Australian and New
Zealand dollars, which are considered to be higher risk, hit
eight-month highs against the U.S, currency.
"Generally, this is still a case of better-than-expected
data not necessarily good for the U.S. dollar," said Shaun
Osborne, chief currency strategist at TD Securities in Toronto.
"We expect no rebound in sight for the dollar just yet."
As measured against a basket of major currencies, the
Dollar Index <.DXY> fell 0.28 percent at 79.015.
Against the yen, the dollar <JPY=> was up 1.13 percent at
96.37, and the euro <EUR=> was up 0.28 percent at $1.419.
Bonds tumbled. The benchmark 10-year U.S. Treasury note
<US10YT=RR> was down 49/32 in price to yield at 3.65 percent.
The 2-year U.S. Treasury note <US2YT=RR> fell 2/32 in price to
yield 0.95 percent.
Risk premiums jumped on U.S. agency mortgage bonds as
Treasury yields leaped and swap spreads rose. Investors were
concerned about the depth of the Federal Reserve's commitment
to buy as much as $1.45 billion in mortgage-related securities
and up to $300 billion of bonds.
MSCI's index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> advanced 2.2 percent to its highest level since
Oct. 2, and is now up 55 percent since world markets bottomed
on March 9.
Japan's Nikkei share average <> ended 1.6 percent
higher.
(Reporting by Chuck Mikolajczak, Nick Olivari, Lynn Adler and
Chris Rees in New York; Brian Gorman, Alex Lawler, Ian Chua,
Michael Taylor and Maytaal Angel in London; writing by Herbert
Lash; Editing by Kenneth Barry)
