* Wall Street rallies, overcoming early weight of data
* Weak U.S. job, manufacturing data undermined sentiment
* Euro gains vs dollar after Spanish debt sale
* Spot gold rises, crude oil slips
(Recasts, adds closing New York prices, comment)
By Daniel Bases
NEW YORK, June 17 (Reuters) - U.S. stocks rose in a late
rally on Thursday, overcoming weak economic data that added to
worries about a fragile recovery, while European shares and the
euro gained on reassuring demand for Spanish government bonds.
A spurt of buying momentum in a choppy session drove gains
as U.S. equities built on a break in the benchmark S&P 500
index above its 200-day moving average earlier this week.
Prices for gold rose on a combination of safe-haven demand
and the weaker U.S. dollar. Crude oil prices slipped on the
disappointing economic data.
A plunge in an index of factory activity in the U.S.
mid-Atlantic region in June to its lowest level since August
2009 added to worries that a tepid U.S. economic recovery is
fizzling. []
Higher-than-expected weekly claims for U.S. jobless
benefits and the largest drop in U.S. consumer prices in nearly
1-1/2 years also weighed on U.S. shares and caused European
shares to pare early gains. []
U.S. equities drove higher in the last 30 minutes of trade.
The Dow Jones industrial average <> rose 24.71 points, or
0.24 percent, to close at 10,434.17. The Standard & Poor's 500
Index <.SPX> gained 1.43 points, or 0.13 percent, to 1,116.04.
The Nasdaq Composite Index <> climbed 1.23 points, or 0.05
percent, to 2,307.16.
"I don't think that the buyers are willing to give up on
the market just yet, we still have quite a bit of momentum,"
said Peter Kenny, managing director at Knight Equity Markets in
Jersey City, New Jersey.
Apple Inc <AAPL.O> touched a lifetime high at $272.90 a day
after the company said its new iPhone set a record sales pace
with orders of more than 600,000. Apple shares ended up 1.7
percent at $271.87.
But the list of winners was short. U.S. consumer
discretionary shares were a drag on markets, with home goods
retailer Bed, Bath & Beyond Inc <BBBY.O> down 7.6 percent to
$41.70. The S&P retail index <.RLX> was off 1.25 percent.
Consumer spending typically accounts for about two-thirds
of U.S. economic activity, making the weak labor market a
source of ongoing concern.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. consumer prices, click: http://link.reuters.com/hyz52m
U.S. jobless claims, click: http://link.reuters.com/kax52m
Euro up on Spanish debt demand: http://link.reuters.com/dap62m
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
European shares closed higher for a seventh straight
session on Thursday, even as the U.S. data diminished risk
appetite.
The FTSEurofirst 300 <> index of top European shares
closed up 0.25 percent at 1,041.84 points as solid demand for
Spain's auction of government bonds boosted investor confidence
in the euro zone's economic outlook.
Oil major BP Plc <BP.L> surged 6.7 percent a day after it
said it will set up a $20 billion fund for damage claims from
its huge Gulf of Mexico oil spill, sell assets and suspend
dividend payments. The actions removed uncertainty over the
dividend and the size of the funds to cover claims.
[]
Tony Hayward, BP's chief executive officer, was grilled on
Thursday by U.S. lawmakers about the oil spill.
Tokyo shares fell 0.7 percent from one-month highs, ending
a five day winning streak for the benchmark Nikkei-225 index
<>.
EUROPEAN DEBT SALES
The euro rose against the dollar after Spain's ability to
sell bonds soothed worries about the country's public finances
and squeezed short positions by investors who had been betting
against the single currency.
The euro rose 0.64 percent versus the dollar to $1.2385
<EUR=>. The greenback also fell against the yen, down 0.48
percent to 90.98 yen <JPY=> as the weak U.S. data increased
risk aversion.
Spain's auction of 3.5 billion euros ($4.3 billion) worth
of 10-year and 30-year government bonds drew strong demand,
although it paid a hefty premium compared with previous issues
of the same paper.
While the debt succeeded in finding buyers, analysts
remained cautious about Spain's funding prospects.
"Spain ... wanted to show it could issue paper without
problems. But they paid a lot to get the paper away," said Huw
Worthington, a bond strategist at Barclays Capital in London.
The well-covered auction helped narrow the spread of
Spanish yields over benchmark Bunds from an earlier euro
lifetime high of 237 basis points. <ES10YT=TWEB><DE10YT=TWEB>
The spread snapped back after the auction and was last at
214 basis points.
"The strong demand for Spanish bonds should help restore
confidence, said Ciaran O'Hagan, strategist at Societe
Generale.
The two-year Schatz yield <DE2YT=TWEB> was up 2.6 basis
points at 0.528 percent, while the 10-year Bund yield
<DE10YT=TWEB> was down 1.4 bps at 2.664 percent.
Benchmark 10-year U.S. Treasuries rose 20/32 of a point in
price, pushing the yield down to 3.19 percent <US10YT=RR>.
In commodities, spot gold prices <XAU=> rose $15.30, or
1.24 percent, to $1245.90. U.S. light sweet crude oil <CLc1>
fell 88 cents, or 0.88 percent, to $76.79 per barrel.
(Additional reporting by George Matlock, Kirsten Donovan and
Natsuko Waki in London, Edward Krudy in New York; Editing by
Leslie Adler)
