* US dollar index hits 3-yr trough, approaches record low
* Gold jumps to life-time high, silver at 31-year peak
* Strong U.S., European company results lift stocks
* Disappointing U.S. data supports Treasury debt prices
(Updates with Wall Street closing levels, adds quote)
By Richard Leong
NEW YORK, April 21 (Reuters) - The U.S. dollar tumbled to a
three-year low against major currencies on Thursday and gold
prices surged to a record high as investors flocked to
investments that are less reliant on the U.S. economy.
Strong U.S. and European corporate earnings propelled world
stocks to a 33-month high. Many U.S. companies have huge chunks
of business outside the country, where demand and investments
are growing, providing a cushion as the U.S. economy shows
signs of slowing again due to weak job growth and rising oil
prices.
An erosion of the dollar accelerated this week after a
warning by Standard & Poor's on the United States' massive debt
load and as the economy showed signs of slowing. Equities
markets, however, were largely unaffected by S&P's warning.
The dollar has already been bogged down by the Federal
Reserve's near-zero interest rate policy and overseas central
banks' ongoing diversification from the U.S. currency, despite
the festering fiscal problem in Europe.
S&P on Monday said it might take away the United States'
coveted AAA credit rating within two years if Washington fails
to achieve a plan to slash its $14 trillion debt load.
"All these factors are just dollar negative," said Jessica
Hoversen, currency and bond analyst at MF Global in New York.
"Barring something happens in Europe, the dollar will probably
continue to turn lower."
But in noting Wall Street's resiliency, she added, "Stocks
are not backed by the credibility of the dollar and so many
U.S. companies are multi-national."
Emboldened investors are now piling back into riskier
assets, though some analysts advised caution as worries about
the euro zone debt crisis and problems in the supply chain
following the Japanese earthquake stayed in the background.
Expectations that the U.S. central bank will keep interest
rates at near zero for the foreseeable future, even as other
major central banks raise rates or are about to tighten, have
pressured the dollar in recent weeks.
The dollar index <.DXY> was down by 0.4 percent to 74.092
after falling to 73.735, its lowest level since August 2008.
Light holiday trading volume magnified foreign central banks'
gradual reduction of the U.S. dollar from their reserves.
Technical charts suggested the index could move towards a
record low of 70.698 hit in 2008. []
U.S. financial markets will be closed Friday for Good
Friday, while British markets will be closed both Friday and
Monday for the long Easter weekend.
STOCKS, GOLD ADVANCE
The weak greenback and inflation concerns raised the appeal
of gold. Spot gold <XAU=> hit a record high at $1,508.75 before
paring gains, while spot silver <XAG=> soared to a 31-year high
at $46.66 an ounce. []
"People want hard assets and that's what people are
comfortable with," said Randy Billhardt, head of institutional
sales and trading at MLV & Co. in New York.
Investors snapped up stocks as strong earnings overshadowed
weaker-than-expected economic data from Germany and the United
States.
The MSCI All-Country World Index <.MIWD00000PUS> rose for a
third straight day. It was up 0.7 percent, touching a high of
350.82, a level last seen in July 2008.
Wall Street posted its first positive week in three, as
blowout results from Apple and strong results from a number of
industrial companies kept sentiment on the bullish side.
The Dow Jones industrial average <> was up 52.45
points, or 0.42 percent, at 12,505.99. The Standard & Poor's
500 Index <.SPX> was up 7.02 points, or 0.53 percent, at
1,337.38. The Nasdaq Composite Index <> was up 17.65
points, or 0.63 percent, at 2,820.16. []
The FTSEurofirst 300 <> index of top European shares
ended up 0.4 percent.
Asian shares climbed to their highest since January 2008.
The MSCI Asia ex-Japan index <.MIAPJ0000PUS> gained 1.3
percent, while Japan's Nikkei <> closed up 0.8 percent.
Oil prices rebounded from earlier losses linked to weak
data on U.S. jobs and regional manufacturing. U.S. June crude
futures <CLc1> were up 77 cents at $112.22 a barrel. []
"It's two steps forward, one step back. I don't see
anything in them that's concerning for the general direction of
the economy," said Jim Baird, chief investment strategist at
Plante Moran Financial Advisors in Kalamazoo, Michigan.
Thursday's U.S. economic reports supported the Treasury
bond market, reinforcing expectations that the Fed, which holds
a policy meeting next week, will pledge to keep interest rates
low well into next year.
Benchmark 10-year Treasury notes <US10YT=RR> were up 4/32
in price to yield 3.39 percent, down 0.01 percentage point from
late on Wednesday. []
The weaker outlook also reduced investor expectations on
U.S. inflation. The five-year breakeven rate, which is the
yield gap between five-year Treasury Inflation-Protected
Securities and regular five-year government debt, fell to 2.31
percent, down 0.03 percentage point from late Wednesday.
(Additional reporting by Wanfeng Zhou, Karen Brettell, Frank
Tang and Robert Gibbons, Editing by Chizu Nomiyama and Leslie
Adler)
