* Stocks rally globally on better-than-expected U.S. data
* Oil nears $74 a barrel as U.S. manufacturing data shines
* Government debt prices fall on signs of global growth
* China data also revives appetite for riskier assets
(Updates with close of European markets)
By Herbert Lash
NEW YORK, Sept 1 (Reuters) - A manufacturing rebound in
China and stronger-than-expected U.S. factory data spurred a
jump in equity and commodity prices worldwide on Wednesday,
helping start the month on a bright note after a sour August.
The U.S. dollar and Japanese yen fell broadly after the
manufacturing data. That data and news that Australia's economy
grew in the second quarter at its fastest pace in three years
boosted investors' appetite for riskier assets. For details
see: []
Government debt prices extended losses, with the price of
benchmark 10-year U.S. Treasury notes and German Bund futures
shedding more than a full point, as the strong Chinese and U.S.
data eased concerns about the health of the global economy.
Oil prices and equity markets extended solid gains after
data from the Institute for Supply Management showed U.S.
factory activity rose in August for a 13th straight month.
Major stock indexes around the globe rallied more than 2
percent, with MSCI's all-country world index <.MIWD00000PUS> up
2.6 percent.
The Dow Jones industrial average <> was up 234.81
points, or 2.34 percent, at 10,249.60. The Standard & Poor's
500 Index <.SPX> was up 28.02 points, or 2.67 percent, at
1,077.35. The Nasdaq Composite Index <> was up 56.31
points, or 2.66 percent, at 2,170.34.
European shares rose at their fastest pace in three months.
The FTSEurofirst 300 <> index of leading European shares
rose 2.8 percent to close at 1,055.69 points, its biggest
one-day percentage gain since late May.
The Thomson Reuters euro zone peripheral index
<.TRXFLDPIPU> gained 3.90 percent.
Investors had been expecting the ISM reading on U.S.
manufacturing to show a decline from July, which would have fit
with recent data that has shown a decided slowdown in the U.S.
economic recovery.
ISM said its index of U.S. factory activity rose to 56.3 in
August from 55.5 in July, much higher than a survey of 79
economists by Reuters whose median forecast was 53.0.
"The consensus estimate was for this number to decline, so
it was a very, very supportive number for the market," said
Quincy Krosby, market strategist at Prudential Financial in
Newark, New Jersey.
"It couples with the data out of China, Australia and the
numbers we got out of Germany and India. What it indicates is
the trajectory for global growth is still positive," she said.
Manufacturing growth in Germany slowed in August, although
other recent data show Europe's biggest economy is expanding
fast. Indian manufacturing also expanded at a slightly slower
pace than in July following its economy's fastest growth rate
in nearly three years in the second quarter. []
The reduced fears of a further slide in global economic
growth sent investors into perceived riskier currencies such as
the euro and Australian dollar.
The euro climbed above $1.2850 at one point and the
Australian currency soared 2 percent versus the U.S. dollar.
The euro <EUR=> was up 0.94 percent at $1.2804, while
against the yen, the U.S. dollar <JPY=> was up 0.33 percent at
84.44.
The greenback was down against a basket of major
currencies, with the U.S. Dollar Index <.DXY> down 0.89 percent
at 82.458.
"The acceleration in manufacturing activity in the U.S. and
China alleviates some of the fears for a global slowdown and a
double-dip recession in the U.S," said Kathy Lien, director of
currency research at GFT in New York.
Copper hit its highest level in more than four months,
while oil rose to above $74 a barrel. []
Shares of aluminum producer Alcoa Inc <AA.N> gained 2.6
percent to $10.48, while Freeport McMoRan Copper & Gold Inc
<FCX.N> climbed 5.5 percent to $75.94 on higher metals prices.
Energy shares jumped with the crude's rise. The NYSE Arca
Oil index <.XOI> rose 3.54 percent.
U.S. light sweet crude oil <CLc1> rose $2.12 to $74.04 a
barrel.
ICE Brent <LCOc1> rose $1.96 to $76.60.
China's purchasing managers' index (PMI) rose to 51.7 in
August from 51.2 in the previous month, official data showed on
Wednesday. []
European shares advanced to a near two-week high, bolstered
by mining shares on merger and acquisition talk, including
BHP's hostile bid for Canadian group Potash Corp <POT.TO>.
Rio Tinto <RIO.L> rose 6.1 percent and BHP Billiton <BLT.L>
added 3.9 percent. []
Cable & Wireless Worldwide <CWP.L> rose 5.2 percent, with
traders citing market talk of bid interest from U.S. rival AT&T
<T.N>. The British company declined to comment.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 33/32 in price to yield 2.59 percent.
Spot gold prices <XAU=> rose 60 cents to $1,246.20 an
ounce.
(Reporting by Chuck Mikolajczak, Wanfeng Zhou and John Parry
in New York; Dominic Lau, Christopher Johnson and Jan Harvey in
London; Writing by Herbert Lash; Editing by Kenneth Barry)
