(Corrects 3rd paragraph to reflect that German index measures
business, not consumer sentiment)
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, April 24 (Reuters) - U.S. and European stocks
rebounded on Thursday on a rally in financial shares as a key
gauge of corporate investment appetite held steady and
investors took heart in data showing a resilient U.S. economy.
U.S. government debt prices fell, pushing yields on
short-dated paper to a three-month high, after data showing an
unexpectedly low number of people applied for jobless benefits
fueled doubts the Federal Reserve will keep cutting interest
rates.
The dollar rose broadly on the signs of resilience in the
U.S. labor market, while a key business sentiment measure in
Germany plunged, weighing on the euro.
In the United States, the Commerce Department reported that
nondefense capital goods orders excluding aircraft, a closely
watched proxy for business spending, was unchanged as forecast
in March and was revised upward for the previous month.
U.S. stocks jumped as investors bet the worst might be over
in the financial sector and that the U.S. economic slowdown
won't be as deep or prolonged as some have feared. A sharp
pullback in oil prices and positive broker views on iPod maker
Apple Inc <AAPL.O> also buoyed sentiment.
"The jobless claims were down and that was supportive for
the market," said Frank Lesh, analyst and broker at FuturePath
Trading LLC in Chicago. While new-home sales fell, "no one
expects home sales to do a lot in this environment."
In early afternoon, the Dow Jones industrial average <>
was up 110.65 points, or 0.87 percent, at 12,873.87. The
Standard & Poor's 500 Index <.SPX> was up 10.78 points, or 0.78
percent, at 1,390.71. The Nasdaq Composite Index <> was up
25.67 points, or 1.07 percent, at 2,430.88.
Banking shares led the surge on Wall Street, with the
Standard & Poor's financial index <.GSPF> rising 3.6 percent.
Chief Executive John Thain of Merrill Lynch & Co <MER.N>
told the company's annual shareholders meeting that the U.S.
economy will remain difficult in 2008, but "what's happening is
we're shifting -- the credit-related markets are getting
better."
Shares of Apple jumped 2.9 percent to $167.61.
European shares also rose, led by Swiss bank Credit Suisse
<CSGN.VX> and drug makers such as Novartis <NOVN.VX>. The
late-morning rise on Wall Street also boosted European shares
just before markets closed.
The FTSEurofirst 300 <> benchmark of top European
shares closed up 0.2 percent at 1,315.78 points after a choppy
session that saw the index drop as much as 1.3 percent.
Credit Suisse rose 4.2 percent despite booking a further
5.3 billion Swiss francs ($5.18 billion) in credit-linked
write-downs, a move that investors saw as positive due to the
bank's reduced risk exposure.
Better-than-expected quarterly earnings from the likes of
engineering group ABB <ABBN.VX>, whose shares rose 6.5 percent,
as well as chemical and pharmaceutical group Bayer <BAYG.DE>,
up 3.1 percent, also underpinned the equity markets.
Falling demand for the euro for a second straight day came
after the single currency traded above a record $1.60 on
Tuesday, its highest level since its inception in 1999. Traders
and investors bought the euro betting the next move by the
European Central Bank would be a hike on benchmark interest
rates.
But ECB policy-makers' comments on excess currency
volatility and soft economic data this week damped higher rate
expectations, and triggered a sell-off in the euro.
"The U.S. data today is pretty clearly dollar positive and
we're coming off some weaker European data," said Brian Dolan,
head of research at consultancy Forex.com in Bedminster, New
Jersey.
U.S. jobless claims fell sharply last week to 342,000.
A stronger-than-expected deterioration in corporate
sentiment in Germany and France also raised questions about
whether the ECB would moderate its interest-rate stance.
ECB policy-maker Michael Bonello said he personally
believed it was very difficult to make a case for higher rates,
although the inflation outlook has deteriorated.
The euro <EUR=> fell 1.48 percent at $1.5652, while against
major trading-partner currencies the dollar rose, with the U.S.
Dollar Index <.DXY> up 1.19 percent at 72.663.
Against the yen, the dollar <JPY=> rose 1.03 percent at
104.39.
The dollar's bounce against the euro pressured crude oil
prices and prompted gold investors to liquidate some holdings.
Gold prices slipped nearly 2 percent to a three-week low below
$900 an ounce.
"This morning's sell-off has been engineered by the
strengthening of the dollar," said Nauman Barakat, senior vice
president at Macquarie Futures USA.
U.S. light sweet crude oil <CLc1> fell $3.00, or 2.54
percent, to $115.30 per barrel.
Shortly after midday, spot gold prices <XAU=> were off
$18.65, or 2.1 percent, to $884.55.
U.S. Treasury debt prices were lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 26/32, with the yield at 3.8386 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 9/32, with the yield at
2.3865 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 39/32, with the yield at 4.5735 percent.
In Asia, Chinese shares jumped after a two-thirds cut in a
securities trading tax, and a modest rebound in the dollar gave
Asian stocks a brief lift ahead of company earnings reports.
The Shanghai Composite Index <>, which had plummeted
more than 50 percent since October, gained 9.3 percent.
Hong Kong's Hang Seng index <> gained 1.6 percent, but
Japan's Nikkei average <> closed down 0.3 percent.
Asian shares outside Japan <.MIAPJ0000PUS> fell 0.3
percent.
(Editing by Leslie Adler)
