* Stocks rally globally on better-than-expected U.S. data
* Oil hits $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 U.S. markets)
By Herbert Lash
NEW YORK, Sept 1 (Reuters) - Global stocks posted their
biggest percentage gain this summer on Wednesday after U.S. and
Chinese manufacturing data eased worries about the world's
flagging economy and helped spur a rally in commodities.
The U.S. dollar and Japanese yen fell broadly after the
release of the manufacturing data and on news that Australia's
economy grew in the second quarter at its fastest pace in three
years. For details see: []
Oil rose more than 3 percent to above $74 a barrel and
copper hit its highest level in more than four months after the
upbeat economic news boosted sentiment that had been battered
by a spate of recent poor U.S. economic data.
As investors' appetite for riskier assets rose, government
debt prices fell sharply. Benchmark 10-year U.S. Treasury notes
and German Bund futures shed more than a full point.
"A rebound in risk appetite lured wary investors out of the
relative safety of U.S. dollar-denominated assets," said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange
in Washington. "Surging stocks and generally firmer commodities
signaled an improving mood throughout global markets."
Major stock indexes around the world rallied more than 2
percent. MSCI's all-country world index <.MIWD00000PUS> surged
2.7 percent in its biggest one-day percentage gain since May
27.
European shares rose at their fastest pace in three months
and Wall Street posted its best day in eight weeks, as the
Nasdaq and S&P 500 stock gauges rose almost 3 percent.
U.S. stocks rallied in a broad-based advance after data
showed U.S. factory activity grew faster than forecast in
August and Chinese manufacturing rebounded last month.
More than six stocks rose for every one that fell among
shares listed on the New York Stock Exchange. Economically
sensitive sectors like industrials and basic materials posted
the biggest gains among U.S. stocks.
Low volume helped exaggerate gains due to aggressive
bidding by momentum players and hedge funds, according to Jason
Weisberg, director of institutional trading at Seaport
Securities in New York.
"They're moving the needle with force, but there's not a
lot of volume behind it. There's a bunch of people trying to
chase returns and this becomes a vicious game," Weisberg said.
Heavy equipment maker Caterpillar Inc <CAT.N>, which is
sensitive to changes in economic activity, rose 4.6 percent to
$68.16.
Energy-related shares rose with as the global economic data
drove up the price of crude oil. The NYSE Arca Oil stock index
<.XOI> rose 4.1 percent and the PHLX oil services index <.OSX>
jumped 4.8 percent.
The global stock rally gained momentum after the Institute
for Supply Management showed U.S. factory activity rose in
August for a 13th straight month in a reading that was higher
than the median forecast of economists surveyed by Reuters.
Investors had been expecting the ISM reading to show a
decline in manufacturing from July, which would have fit with
recent data that has depicted a slowdown in U.S. growth.
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.
Reduced fears of a further slide in global 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 0.99 percent at $1.281, 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 0.90 percent
at 82.453.
"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.
Benchmark U.S. crude oil futures for October <CLc1> settled
$1.99 higher at $73.91 a barrel, after rising as high as
$74.48.
London ICE Brent crude futures <LCOc1> rose $1.77 to end at
$76.35.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 30/32 in price to yield 2.58 percent.
Gold turned lower after an initial rally pushed prices to a
two-month high above $1,250 an ounce, as the increased appetite
for riskier assets such as stocks decreased bullion's appeal as
an alternative investment. []
U.S. gold futures for December delivery <GCZ0> settled down
$2.20 an ounce to $1,248.10.
(Reporting by Rodrigo Campos, Gene Ramos, Wanfeng Zhou, John
Parry and Frank Tang in New York; Brian Gorman and Dominic Lau;
Writing by Herbert Lash; Editing by Leslie Adler)
