* Wall St gains as encouraging data offsets retail sales
* Oil jumps 4 pct to settle at $68.81 a barrel on data
* Bonds fall as slowing U.S. jobless claims cut safety bid
* Euro rises vs dollar after ECB leaves rates unchanged
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, June 4 (Reuters) - U.S. stocks and oil rose in
tandem on Thursday as investors saw signs of a healing U.S.
economy in economic data while gold futures jumped on inflation
fears sparked by surging crude and swelling debt levels.
The U.S. dollar fell against the euro and commodity-linked
currencies such as the Canadian and Australian dollars, weighed
down by a rise in oil to almost $70 a barrel and higher gold
prices.
U.S. government debt prices fell, meanwhile, as investors
favored stocks over Treasuries on an upbeat outlook on banks
and less-dire readings on weekly U.S. jobless claims.
Persistent inflation worries linked to the government's $2
trillion new borrowing also exerted downward pressure on bonds,
sending prices lower for the first time in three sessions and
bolstering the rise in bullion prices.
"There is a hell of a lot of momentum in these markets
right now," said Addison Armstrong, director of market research
at Tradition Energy in Stamford, Connecticut.
Oil hit a seven-month high after U.S. data showed a slight
drop in jobless claims, boosting speculation that the U.S.
economy's recovery could revive ailing energy demand.
U.S. crude for July delivery <CLc1> rose $2.69 to settle
at $68.81, after peaking at $69.60 earlier in the session --
its highest level since early November. London Brent <LCOc1>
gained $2.83 to $68.71.
"The bigger gain in oil, not just today, is encouraging on
the macro level. It's indicative of demand," said Cleveland
Rueckert, market analyst at Birinyi Associates Inc in
Stamford.
A brokerage's upgrade drove banks' shares higher, while the
soaring prices of oil and other commodities lifted shares of
natural resource companies.
The KBW bank index <.BKX> added 4.8 percent, while the S&P
financial index <.GSPF> rose 4.0 percent after RBC Capital
Markets upgraded the banking sector, saying it is poised for a
multiyear bull market. For details, see []
The Dow Jones industrial average <> closed up 74.96
points, or 0.86 percent, at 8,750.24. The Standard & Poor's 500
Index <.SPX> was up 10.70 points, or 1.15 percent, at 942.46.
The Nasdaq Composite Index <> was up 24.10 points, or 1.32
percent, at 1,850.02.
Economic data offset disappointing May retail sales. The
S&P retail index <.RLX> fell 1.2 percent as 63 percent of
retailers posted same-store sales that fell short of Wall
Street estimates, data compiled by Thomson Reuters showed. For
more see [].
The number of U.S. workers filing new claims for jobless
benefits fell for a third straight week, government data
showed, indicating a slower deterioration of the job market.
European shares closed flat as gains in drugmakers and oil
producers were offset by weaker mining stocks and the European
Central Bank's decision to keep interest rate unchanged.
The FTSEurofirst 300 <> index of top European
companies closed down 0.2 percent at 866.56. The index moved in
and out of positive territory throughout the session.
The pound was lower against the dollar after the Bank of
England also left its benchmark rate unchanged.
The ECB said it expected recession in the euro zone to last
another year, and reiterated plans to buy 60 billion euros in
covered bonds.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.17 percent at 79.355.
The euro <EUR=> was up 0.23 percent at $1.4184, and against
the yen, the dollar <JPY=> was up 0.76 percent at 96.920.
Treasury debt prices fell.
The benchmark 10-year U.S. Treasury note <US10YT=RR> shed
43/32 in price to yield 3.70 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 3/32 in price to yield 0.95 percent.
The bond sell-off intensified by hedging on a spate of
corporate debt supply, analysts said. This move, known as
rate-locking, protects issuers and dealers from changes in the
spread between corporate debt rates and Treasury yields.
"There's caution in the Treasuries market. There's also
some concerns about tomorrow's (jobs) number," said Kevin
Giddis, head of fixed income sales, trading and research at
Morgan Keegan in Memphis, Tennessee.
The U.S. August gold futures contract <GCQ9> settled up
$16.70 at $982.30 an ounce in New York.
Asian equities fell overnight from eight-month highs, led
by commodity-related shares, as investors followed a downturn
in U.S and European markets the day before.
The MSCI index of Asia Pacific shares outside Japan
<.MIAPJ0000PUS> slipped 1.9 percent and Japan's Nikkei <>
lost 0.75 percent.
(Reporting by Richard Valdmanis, Ellis Mnyandu, Gertrude
Chavez-Dreyfuss and Richard Leong in New York; Brian Gorman,
Kirsten Donovan, Ian Chua, Joe Brock and Jan Harvey in London;
Editing by Padraic Cassidy)
