(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, May 8 (Reuters) - Oil prices surged to a fourth
straight record high on Thursday and U.S. stocks rose slightly,
lifted by encouraging economic data and energy shares that
climbed with crude trading at more than $124 a barrel.
The dollar fell as the euro rebounded from a two-month low
against the greenback after the European Central Bank left
euro-zone interest rates unchanged and the bank focused more on
inflation than some had expected. This implied that
euro-denominated assets would retain an interest rate advantage
over the dollar, making them more attractive to investors.
Oil bounced higher late in the session after slipping more
than $1 in seesaw trade as growing demand for transport fuel in
Europe and power demand in emerging economies supported oil
futures on both sides of the Atlantic.
Mining stocks, such as Alcoa Inc <AA.N> and Freeport
McMoRan Copper & Gold Inc in the United States and platinum
specialist Lonmin <LMI.L> in Europe, helped lift stocks.
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
American economy, while soft, was not crumbling rapidly. For
details, see [].
"There's a shift in the overall sentiment, with people
thinking that the U.S. and the world's economies aren't in such
bad shape," said Cleveland Rueckert, market analyst at Birinyi
Associates Inc in Stamford, Connecticut.
"If you look at stocks that are doing well, it's things
like mining and oil stocks."
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 in 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 food expenses.
The Dow Jones industrial average <> rose 52.43 points,
or 0.41 percent, to close at 12,866.78. The Standard & Poor's
500 Index <.SPX> gained 5.11 points, or 0.37 percent, to end at1,397.68. The Nasdaq Composite Index <> rose 12.75 points,
or 0.52 percent, to finish at 2,451.24.
In Europe, shares fell slightly as both the ECB and the
Bank of England kept rates at 5 percent and 4 percent,
respectively, and investors saw little to suggest euro zone
borrowing costs would fall soon.
The pan-European FTSEurofirst 300 <> index 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.
Mining was the strongest sector in Europe. Lonmin <LMI.L>
gained 6.1 percent and Kazakhmys <KAZ.L> soared 10 percent on
renewed talk of a bid from ENRC <ENRC.L>, which declined to
comment.
ECB President Jean-Claude Trichet said the 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.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.07 percent at 73.473.
The euro <EUR=> gained 0.06 percent to $1.5399. Against the
yen, the dollar <JPY=> fell 0.67 percent to 103.95.
Oil rallied back from early losses as strong diesel demand
outweighed signs of rising supplies from the Organization of
Petroleum Exporting Countries.
U.S. crude <CLc1> surged to an all-peak of $124.57 a barrel
in late activity, after settling up 16 cents at $123.69.
London Brent crude <LCOc1> rose $1.47 to $123.79 a barrel,
after settling 52 cents higher at $122.84.
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
21/32 to yield 3.79 percent. The two-year U.S. Treasury note
<US2YT=RR> rose 5/32 to yield 2.23 percent. The 30-year U.S.
Treasury bond <US30YT=RR> rose 29/32 to yield 4.55 percent.
Gold closed sharply higher as an initial dollar rally
stalled, and platinum surged ahead of the launch of new
platinum exchange-traded notes (ETNs), dealers said.
The June contract <GCM8> for gold rose $10.90, or 1.3
percent, to $882.10 an ounce in New York.
(Reporting by Herbert Lash; Editing by Jonathan Oatis)
