* Global stocks up on recovery expectations
* Dollar pressured by rise in commodities
* Oil boosted by heating oil demand, gold up
* Markets volatile, thin in holiday season
(Updates prices, European markets' close)
By Manuela Badawy
NEW YORK, Dec 28 (Reuters) - Global stocks edged higher on
Tuesday on expectations the U.S. economy is on track for
recovery while the dollar slipped as commodity prices surged.
U.S. crude oil futures rose above $91 a barrel and were
near a 26-month high, boosted by demand for heating oil after a
storm hit in the U.S. East Coast and by a weaker dollar. U.S.
Treasury prices fell before a $35 billion auction of five-year
notes.
Trading volumes in all markets were light due to the
Christmas holiday and as the northeastern United States dug
itself out from the winter storm that disrupted travel.
"Data in recent weeks have been supportive of the stocks
and commodity markets globally. The U.S. will avoid a
double-dip. The Asian region, including Japan, looks a little
bit better, with its industrial production finally showing an
increase," said David Cohen, director of Asian Economic
Forecasting at Action Economics.
The MSCI All Country World index <.MIWD00000PUS> rose 0.15
percent while the Thomson Reuters global stock index
<.TRXFLDGLPU> gained 0.02 percent.
But investors were reluctant to take large new positions
after weaker-than-expected U.S. data on consumer confidence and
home prices.
The S&P/Case Shiller home prices indexes showed prices of
U.S. single-family homes fell almost double the expected pace
in October, while confidence unexpectedly deteriorated in
December over increasing worries about jobs. For details, see
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While the data were a negative surprise, "it's not
impacting the market so much due to the light volume and lack
of activity," Peter Cardillo, chief market economist at Avalon
Partners in New York, said.
The Dow Jones industrial average <> was up 2.91 points,
or 0.03 percent, at 11,557.94. The Standard & Poor's 500 Index
<.SPX> was down 0.68 point, or 0.05 percent, at 1,256.86. The
Nasdaq Composite Index <> was down 7.87 points, or 0.30
percent, at 2,659.40.
The pan-European FTSEurofirst 300 <> index of top
shares closed up 0.3 percent at 1,140.44 points. Volume was
extremely low at just one-quarter of the 30-day average. Many
traders closed their books for the year, while a holiday in
Britain and bad weather in the U.S. Northeast thinned trading
floors. The UK market will reopen on Wednesday.
Shares in Japan and China eased on Tuesday on concerns
further Chinese monetary tightening will cool the engine of
world economic growth. Those worries overshadowed Japanese data
that pointed to improving demand.
Japan's Nikkei <> closed down 0.6 percent.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.11 percent as a rise in oil and gold
prices kept the dollar pressured.
The euro <EUR=> was down 0.24 percent at $1.3126 after
climbing as high as $1.3274 overnight.
"Dollar weakness is basically on the back of commodities,"
Dean Popplewell, chief strategist of FX brokerage OANDA in
Toronto, said. "Both oil and gold are seeing robust demand. The
market seems to have shrugged off the interest-rate hike in
China over the weekend."
The dollar also hit an all-time low against the Swiss franc
<CHF=EBS> at around 0.9435 francs on year-end buying by Swiss
corporates.
The yen rallied against the dollar after data showed
Japanese factory output rose for the first time in six months
in November. Against the Japanese yen, the dollar <JPY=> was
down 0.72 percent at 82.190.
COMMODITIES RALLY, BONDS EYED
Crude oil prices <CLc1> rose 0.43 percent to $91.38 a
barrel, just shy of the $91.88 reached on Monday -- the highest
since October 2008.
Spot gold prices <XAU=> rose $20.24, or 1.46 percent, to
$1,403.80 an ounce as the dollar fell.
"The end of the year loss of confidence in the dollar value
has brought gold players back into the market on the long
side," said George Nickas, a broker at FC Stone in New York.
U.S. government bonds were mixed in thin volume before the
auction of new five-year notes.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 23/32, with the yield at 3.4168 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 3/32, with the yield at 0.7196
percent. The 30-year U.S. Treasury bond <US30YT=RR> was down
46/32, with the yield at 4.4865 percent.
(Additional reporting by Chuck Mikolajczak, Wanfeng Zhou,
Karen Brettell and Rujun Shen in New York, and Barbara Lewis in
London; Editing by Kenneth Barry)
