* U.S. dollar extends losses with key breaches in sight
* Silver sets record near $50 an ounce
* U.S. stocks edge up as economic data disappoints
* Government debt prices gain after U.S. jobless, GDP data
(Updates to U.S. markets close)
By Herbert Lash
NEW YORK, April 28 (Reuters) - The dollar extended losses
on Thursday, sparking a record surge in silver, but Wall Street
rebounded in a late rally on bets a dose of poor economic data
will not slow growth enough to derail the equity bull market.
Spot silver <XAG=> hit an all-time high of $49.51 an ounce
as the dollar's slide and yet another record in gold triggered
heavy speculative buying in precious metals. For details see
[].
The dollar fell to a fresh three-year low against major
currencies after the Federal Reserve on Wednesday signaled it
planned to keep interest rates near zero. Softer-than-expected
U.S. jobs and growth data underscored the bearish mood.
[]
But Wall Street rallied, with a gauge of the U.S. transport
sector closing at an all-time high in a sign of more gains
ahead because of its role as a touchstone of economic demand.
The Dow Jones Transports <.DJT> rose 1.2 percent to
5510.06, led by railway Norfolk Southern <NSC.N>, which jumped
8 percent to $73.87 after reporting strong results.
[]
The Dow Jones industrial average and Standard & Poor's 500
Index have rallied for six of the past seven sessions, while
the Nasdaq this week surged to a 10-year high.
With trading volume weak and economic data suggesting a
still unsteady path to recovery, it raises questions as to how
much longer the equity market can maintain the rally.
"There is a disconnect in the market right now -- we are
getting this mixed bag of news," said Jonathan Corpina, head of
NYSE floor operations for Meridian Equity Partners in New
York.
The Dow <> closed up 72.35 points, or 0.57 percent, at
12,763.31. The S&P 500 <.SPX> gained 4.82 points, or 0.36
percent, at 1,360.48. The Nasdaq <> rose 2.65 points, or
0.09 percent, at 2,872.53.
U.S. crude oil futures hit a 31-month high settlement in a
volatile trading session that saw a weak dollar attract
investors seeking alternative assets. U.S. monetary policy has
encouraged investors to seek higher returns in riskier assets.
U.S. crude for June delivery <CLc1> settled up 10 cents at
$112.86 a barrel. In London, ICE Brent June crude <LCOc1> ended
at $125.02, off just 11 cents for the session.
"The Fed did not give commodities traders any reason to
think that the dollar's fall will be stemmed, creating
incentive to keep buying commodities," said Stephen Schork,
president at the Schork Group in Villanova, Pennsylvania.
The dollar was down 0.83 percent at 81.53 yen <JPY=>, while
the U.S. dollar index <.DXY>, a basket of six currencies, fell
to its lowest since July 2008, and was last off 0.55 percent at
73.116.
The euro rose to $1.4821 <EUR=>, after hitting a 17-month
high of $1.4882 on trading platform EBS.
Oil prices initially slipped on Commerce Department data
that showed U.S. gross domestic product growth for the first
quarter slowing to a 1.8 percent annual pace, or two-tenths of
a percent less than markets had expected. []
The Fed's ultra-loose monetary policy has been a bane for
the dollar. But low U.S. interest rates have been a boon for
the euro, which is up nearly 11 percent this year.
U.S. STOCKS TAKE DATA IN STRIDE
On Wall Street, stocks at first faltered on the signs of
slower growth, but investors said they needed to see more data
before calling an end to the rally in equities.
The volatile weekly U.S. jobless numbers, which showed
first-time claims for unemployment benefits jumped to 429,000
last week, well above a Reuters consensus forecasts of 392,000,
may be a silver lining.
"At the moment, we regard the rise (in claims) as
technical," said Chris Rupkey, chief financial economist of
Bank of Tokyo/Mitsubishi UFJ in New York.
"We need to see initial unemployment claims fall sharply
below 400,000 in upcoming weeks to make sure the economy is not
slowing due to the latest headwind of higher gasoline prices."
Major world stock indexes had surged to near three-year
highs on Wednesday after Fed policy-makers signaled low U.S.
interest rates will remain in place for some time.
The MSCI index of world stocks <.MIWD00000PUS> was up 0.8
percent.
Spot silver <XAG=> was up 72 cents at $48.48 an ounce.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
12/32 in price to yield 3.32 percent.
Spot gold prices <XAU=> rose $8.75 to $1,535.10 an ounce.
(Reporting by Richard Leong, Chuck Mikolajczak, Nick Olivari,
Gene Ramos and Frank Tang in New York; Writing by Herbert Lash;
Editing by James Dalgleish)
