(Recasts with U.S. markets, adds byline; dateline previous
LONDON)
By Herbert Lash
NEW YORK, May 8 (Reuters) - Oil prices retreated after
almost setting a new high on Thursday and U.S. stocks rose
slightly, lifted by encouraging economic data and energy shares
that rose with crude trading at more than $120 a barrel.
The dollar fell as the euro rebounded from a two-month low
against the greenback after the European Central Bank left
interest rates in the euro zone unchanged and the bank focused
more on inflation than some had expected.
U.S. shares climbed after data showed the number of U.S.
workers filing claims for initial jobless benefits fell last
week and retail sales rebounded in April, suggesting that the
economy, while soft, was not crumbling rapidly.
"What we've seen in all the economic data is a really harsh
economic slowdown but not a recession," said Marc Pado, U.S.
market strategist with the San Francisco office of Cantor
Fitzgerald & Co.
"We're still bumping along a bottom, not recovering yet,
but certainly not in deep negative territory like a lot of
people would have us believe," Pado said.
Many economists have concluded the U.S. economy is in
recession, but a string of recent data supports analysts who
argue the United States may be able to dodge a downturn.
Initial claims for state unemployment benefits fell to
365,000 from 383,000 the prior week, the Labor Department said.
The level was slightly lower than Wall Street had expected.
Separately, 68 percent of U.S. retailers reported
better-than-expected sales at stores open at least a year,
partly reflecting strong results at discount chains as
consumers tried to hold down their food expenses.
The Dow Jones industrial average <> rose 42.91 points,
or 0.33 percent, to 12,857.26. The Standard & Poor's 500 Index
<.SPX> gained 2.65 points, or 0.19 percent, to 1,395.22. The
Nasdaq Composite Index <> rose 10.86 points, or 0.45
percent, to 2,449.35.
Shares in Europe fell slightly as both the ECB and the Bank
of England kept rates the same and investors saw little to
suggest euro zone borrowing costs would fall soon.
The pan-European FTSEurofirst 300 <> benchmark closed
down 0.1 percent at 1,360.88 points, with banks taking the most
points off the index.
Swiss bank UBS <UBSN.VX> fell 5.1 percent, while French
bank Societe Generale <SOGN.PA> lost 2.5 percent and British
bank Barclays <BARC.L> slipped 2.5 percent.
The Bank of England kept rates at 5 percent and the ECB
stayed at 4 percent. ECB President Jean-Claude Trichet said his
bank's policy stance would help it achieve price stability,
although inflation was likely to remain high for some time amid
turbulent markets.
"The ECB will need to see more of a slowdown in the economy
for the next months before it lowers rates, and we expect this
to happen in the beginning of fall or end of summer," said
Thierry Lacraz, strategist at Swiss bank Pictet.
In oil markets, U.S. light sweet crude <CLc1> fell 50
cents, or 0.4 percent, to $123.03 per barrel, after rising to
$123.90.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.20 percent at 73.378.
The euro <EUR=> rose 0.16 percent at $1.5415, and against
the yen, the dollar <JPY=> fell 0.79 percent at 103.82.
U.S. Treasury debt prices climbed as traders reinvested
cash from a record amount of maturing federal government bonds
into Treasuries -- $70 billion -- prompted by high oil prices
and renewed economic worries.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
8/32 to yield 3.84 percent. The two-year U.S. Treasury note
<US2YT=RR> rose 2/32 to yield 2.27 percent. The 30-year U.S.
Treasury bond <US30YT=RR> rose 5/32 to yield 4.6 percent.
Gold rose more than 1 percent as the dollar changed course
to fall from two-month highs against the euro.
Spot gold prices <XAU=> rose $17.20, or 1.98 percent, to
$884.35.
(Reporting by Herbert Lash; Editing by Jonathan Oatis)
