(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 10 (Reuters) - Oil prices fell from record
highs and Wall Street stocks rose on Thursday in a tech-led
rally prompted by a profit forecast at bellwether Apple as
investors bet on an improving U.S. economy by year's end.
The dollar reversed losses versus the euro after an early
surge to record highs by the euro zone's single currency, and
gold prices fell after a 10-day high early in the session.
Bond prices initially rose following government reports on
U.S. trade and jobless claims that reinforced the belief the
United States is slipping into recession. But they later
reversed course and fell.
Crude oil fell from a new record in London as top exporter
Saudi Arabia insisted markets were amply supplied despite
falling U.S. inventories, and the Saudi oil minister said the
Kingdom did not plan to change current output.
Wall Street's broad rally somewhat offset losses in
overseas stock markets, and turned bond prices on the notion a
U.S. slowdown will not be as deep as some have expected.
A shallow recession, if it does occur, will prove positive
for corporate earnings and the stock market, analysts said.
Gains in technology bellwethers Intel, Cisco, IBM and Apple
were among the biggest contributors to the benchmark Standard &
Poor's 500 Index.
"If you're optimistic about growth in the second half, then
what is tied to growth and most successful in times of growth?
Technology," said Marc Pado, U.S. market strategist at Cantor
Fitzgerald & Co.
The Dow Jones industrial average <> gained 54.72
points, or 0.44 percent, to 12,581.98. The Standard & Poor's
500 Index <.SPX> was up 6.06 points, or 0.45 percent, at
1,360.55. The Nasdaq Composite Index <> added 29.58
points, or 1.27 percent, to 2,351.70.
An early Easter, budget-conscious consumers and a snowy
and wet March combined to deliver the weakest U.S. retail sales
for the month in 13 years. But investors snapped up retail
stocks, sending the S&P retail index <.RLX> up 1.7 percent
after five sessions of declines in the sector.
Some of the gains were due to short-covering, with traders
who bet on a stock's decline moving to cover their positions,
said Patricia Edwards, managing director at investment firm
Wentworth, Hauser and Violich.
But investors also are betting that conditions will improve
for retailers after the economy pulls out of a slowdown.
"They're looking through the valley of the recession to the
other side," Edwards said.
Stocks in Europe ended lower for a third straight session
but well off the day's lows as strong gains on Wall Street
sparked a late recovery and eclipsed fears of more asset
write-downs in the European banking sector.
European stocks did not react much to the Bank of England
trimming interest rates and the European Central Bank holding
rates steady, as expected.
The ECB held interest rates at 4 percent and President
Jean-Claude Trichet, insisting on the need to continue to fight
inflation, warned that financial market tensions could last
longer and hurt the euro zone economy more than expected.
The BoE cut interest rates for the third time in five
months, by a quarter percentage point to 5 percent.
The FTSEurofirst 300 <> index of top European shares
closed 0.4 percent lower, at 1,303.53 points, after falling as
low as 1,286.14.
"The market is hanging on as a number of stocks that were
slaughtered are now recovering. Is it a new upward trend? We're
not quite sure at this point," said Valerie Plagnol, chief
strategist at CM-CIC Securities, in Paris.
Major Asian stock indexes dropped and the dollar remained
weak on concerns about the impact of the credit crisis on the
global economy and as record oil prices fuel inflation
worries.
The MSCI broad measure of Asian stocks outside Japan
<.MIAPJ0000PUS> edged up 0.5 percent, but is still down by
about 11 percent so far this year.
Japan's Nikkei average <> fell 1.3 percent. Stocks in
Australia <> dropped 1.2 percent and Singapore <.FTSTI>
eased 0.6 percent. Markets in Taiwan and South Korea also fell,
while markets in Shanghai <> and Hong Kong <> posted
small gains.
The yuan strengthened past 7 to the dollar for the first
time in more than a decade, reflecting China's growing economic
power and its increasing use of the currency in the fight
against inflation.
Oil closed lower. U.S. crude <CLc1> settled down 76 cents
at $110.11 a barrel after earlier trading just one cent shy of
the record $112.21 struck on Wednesday. London Brent crude
<LCOc1> fell 20 cents to trade at $108.20 a barrel, after
hitting an all-time high of $109.98 earlier.
"The market rallied on the weak dollar and Nigerian
problems overnight, but Saudi talk of a market well supplied
may have capped it," said Tom Bentz, analyst at BNP Paribas
Commodities Futures Inc.
U.S. Treasury debt prices were lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
14/32, with the yield at 3.5318 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 4/32, its yield at 1.8269
percent. The 30-year U.S. Treasury bond <US30YT=RR> lost 12/32,
with the yield at 4.3418 percent.
In currencies, the dollar rose against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
up 0.39 percent at 72.127.
The euro <EUR=> lost 0.56 percent at $1.5741. Against the
Japanese yen, the dollar <JPY=> was up 0.03 percent at 101.80.
Gold prices fell after hitting a 10-day high earlier in the
session, as the dollar surged from lifetime lows against the
euro, prompting investors to unload bullion.
Spot gold <XAU=> climbed as high as $939.40 an ounce before
falling to a low of $922.90. It fell $5.50, or 0.59 percent, to
$928.30.
(Reporting by Cal Mankowski, Matthew Robinson, Lucia Mutikani
and Richard Leong in New York and Blaise Robinson in Paris;
Editing by Dan Grebler)
