* World stocks surge to 9-month highs
* Better-than-expected U.S. data fuels global rally
* U.S. dollar, bonds fall on demand for risky assets
(Updates with close of U.S. markets)
By Manuela Badawy
NEW YORK, Aug 3 (Reuters) - Global stocks surged to a
nine-month high on Monday as improved economic data from the
United States and China spurred investors' appetite for risk.
The U.S. dollar, considered a safe haven, fell 1 percent to
a 10-month low against a basket of six other major currencies
<.DXY> at 77.582 as investors were upbeat on buying riskier
assets.
Oil <CLc1> settled up 2.13 percent to $71.58 a barrel and
commodity prices surged as investors bid on rising demand from
top consumers China and the United States after
better-than-expected economic data.
U.S. manufacturing shrank in July but slower than in June,
while U.S. construction spending beat expectations in June,
bolstering the view the economy was pulling out of recession.
For more see [].
It was the fifth month in a row that spending on public
building, which makes up a third of total U.S. construction,
had made gains.
This drove the benchmark S&P 500 Index <.SPX> above the
psychologically important 1,000 level and the Dow Jones
industrial average <> up 1.25 percent to 9,286.56. It also
pushed the MSCI all-country world share index <.MIWD00000PUS>
up 2 percent, eclipsing its previous high for the year reached
on Friday.
"It's another data point showing that the economy is
starting to bottom out here, and perhaps the worst is behind
us," said David Dietze, chief investment strategist at Point
View Financial Services in Summit, New Jersey.
"When you couple some indications that in fact economic
activity is no longer going down but perhaps is even going up,
the need by investors for the safe haven represented by
Treasuries diminishes," Dietze said.
U.S. Treasury bonds sold off. The benchmark 10-year U.S.
Treasury note <US10YT=RR> was down 1-8/32 in price, with the
yield, which moves inversely to price, rising to 3.64 percent
from 3.48 late Friday on a hunt for risk.
Data from China, an engine of growth for the world economy
in the last decade, showed a key gauge of factory output hit a
one-year high, but it was fueled by domestic orders rather than
still anemic exports to the West. []
Gold and silver prices rose to seven-week highs as the
dollar slid against the euro to its lowest since mid-December,
boosted by investors' appetite for hard assets.
Spot gold <XAU=> rose to its highest in nearly two months,
hitting an intraday high of $966.90 an ounce and closing up $3
at $958.8; while silver <XAG=> touched $14.47 an ounce, its
highest since mid-June, before closing at $14.25.
"The improvement in U.S. economic data should further boost
risk-seeking and weigh on the dollar for now," said Brian Kim,
a currency strategist at UBS in Stamford, Connecticut.
The euro hit its highest this year at $1.4445 <EUR=> and
was last at $1.4426, up 1.3 percent on the day.
Emerging markets stocks hit more than nine-month highs as
Morgan Stanley Capital International's emerging markets stock
index <.MSCIEF> rose 2.6 percent, while the MSCI Latin American
stock index <.MILA00000PUS> gained 4.3 percent.
The pan-European FTSEurofirst 300 <> index of top
shares closed 1.4 percent higher at 941.93 after touching
947.07, the highest since early November.
Banking stocks added the most points to the index. HSBC
<HSBA.L> gained nearly 5 percent after it reported a pretax
profit above analysts' forecasts. []
Asian stocks clambered to an 11-month high, helped by
Chinese shares.
(Additional reporting by Jessica Mortimer and Jeremy Gaunt in
London; Editing by James Dalgleish)
