* U.S. stocks rise, led by Wal-Mart, financials
* U.S. retail sales, jobless claims disappointing
* German, French return to growth boosts Europe shares
* Government bond yields drop on weak U.S. data
* U.S. dollar weaker, commodities rise
(Adds U.S. markets, changes byline, dateline, previous PARIS)
By Daniel Bases
NEW YORK, Aug 13 (Reuters) - U.S. stocks shook off some
disappointing economic data and losses on Thursday to keep a
global rally alive after Germany and France reported economic
growth in the second quarter, sending share prices higher.
Commodity prices rose while the U.S. dollar lost ground to
the euro after the better-than-expected gross domestic product
data, although overall the euro zone still remained just in
recession during the second quarter, its GDP falling 0.1
percent. For more see [].
American consumers pulled their purse strings tighter in
July, causing retail sales to fall 0.1 percent, although upbeat
earnings from the world's biggest retailer, Wal-Mart Stores Inc
<WMT.N>, helped lift U.S. stocks. []
In midday trade, U.S. stocks were marginally higher. The
Dow Jones industrial average <> was up 0.18 percent while
the Standard & Poor's 500 Index <.SPX> rose 0.37 percent and
the Nasdaq Composite Index <> gained 0.35 percent.
"One of the concerns for the market continuing the rally
is, 'Is the consumer going to come back?' If that doesn't
materialize, the market might be leading up to some
disappointment," Alan Lancz, president of Alan B. Lancz &
Associates Inc in Toledo, Ohio.
Analysts had expected retail sales to rise as a result of
the government "cash for clunkers" program, which gives
consumers cash to swap aging gas-guzzlers for new, more
fuel-efficient models.
"Consumers have cut spending every month. The big surprise
is that we thought 'cash-for-clunkers' was going to add to GDP
but instead it took away spending elsewhere," said Christopher
Low, chief economist at FTN Financial in New York.
The disappointing sales data combined with a rise in weekly
U.S. jobless claims to revive investor concerns about the vigor
of any economic recovery and sent U.S. Treasury prices higher.
[]
On Wednesday the U.S. Federal Reserve said the trajectory
of the U.S. economic downturn was leveling off but sluggish
income growth and continued job losses were constraining
consumer spending.
Financial stocks were among the winners on Thursday.
In U.S. trade, Bank of America Corp <BAC.N> rose 5.4
percent to $16.79 on news that hedge fund manager John Paulson,
who made a fortune betting against financial companies after
foreseeing the credit crisis, had stocked up on the bank's
shares during the second quarter. []
In European trade, Swiss banking giant UBS <UBSN.VX> rose
5.4 percent as investors expected the settlement of a damaging
U.S. tax dispute to allow the bank to focus on becoming
profitable again. []
STOCKS RALLY EXTENDS
World stocks as measured by MSCI <.MIWD00000PUS> reached a
fresh 10-month high, up 1.16 percent on the day and up 17
percent since mid-July.
Japan's Nikkei share average <> rose 0.8 percent,
driven by big auto exporters and tech shares.
Europe's benchmark FTSEurofirst 300 <> index edged up
0.7 percent but was off a 9-month high.
The markets rallied after Germany and France, the euro
zone's two biggest economies, both reported 0.3 percent second-
quarter growth, ending their recessions earlier than expected.
"The improving figure for the euro zone GDP is relatively
good news, but it's too early to declare victory," said Marc
Touati, chief economist at Global Equities in Paris.
The euro was last up 0.7 percent at $1.4300 <EUR=> after
rising to $1.4327, its highest in a week, while the dollar fell
1 percent to 95.13 yen <JPY=> after rising on the U.S. data.
Against a basket of major trading-partner currencies, the
U.S. Dollar Index <.DXY> fell 0.62 percent as investors
switched to riskier assets such as commodities after the Fed's
statement that the U.S. economy was reaching a trough.
Copper prices reached fresh 10-month highs <HGc1> while
crude oil prices <CLc1> rose $1.00 to $71.16 a barrel. Spot
gold <XAU=> rose $10.15, or 1.07 percent, to $956.40.
U.S. Treasuries prices rose on the U.S. data, while a well
received $15 billion auction of 30-year Treasury bonds, the
last leg of a record $75 billion quarterly refunding, helped
extend those gains.
The benchmark 10-year Treasury note's yield fell to 3.63
percent <US10YT=RR> from 3.72 percent on Wednesday. The 30-year
Treasury bond <US30YT=RR> yield dropped to 4.47 percent from
4.54 percent in the prior session.
European government bond yields also fell after the
weaker-than-expected U.S. data. Ten-year Bunds yielded 3.431
percent <EU10YT=RR>, off about three basis points, while
interest rate-sensitive two-year Schatz yields were four basis
points lower at 1.411 percent <EU2YT=RR>.
(Additional reporting by Angela Moon, Richard Leong and Nick
Olivari in New York; Lucia Mutikani in Washington; Nicole
Maestri in San Francisco; Blaise Robinson in Paris and Ian
Chua, Joe Brock and Kirsten Donovan in London; Editing by James
Dalgleish)
