* U.S. stocks rise on better-than-expected economic news
* Dollar rises as oil pullback underpins rosier sentiment
* Bonds fall as economic data fans fears of Fed rate hike
(Recasts throughout with U.S. market focus, adds byline;
dateline previous LONDON)
By Herbert Lash
NEW YORK, July 25 (Reuters) - U.S. stocks rebounded and
government debt prices fell on Friday as equity investors'
sentiment was buoyed by a pullback in oil prices and a flurry
of stronger-than-expected U.S. economic reports.
The dollar rallied against the yen after new U.S. home
sales in June, and consumer sentiment and business investment
in July, all beat consensus estimates.
The data offered a glimmer of hope for the beaten-down U.S.
housing market, although analysts said improved consumer
sentiment among Americans was linked to government economic
stimulus efforts, which are temporary. Stocks fell to wide
losses in the prior session as weak housing and employment data
fanned concerns.
Oil fell to a fresh seven-week low, extending a decline
that has knocked more than $20 off prices since a barrel of
crude soared to an all-time high of $147.27 two weeks ago.
At one point oil shed more than $2 <CLc1> to fall below
$124 a barrel, and further declines would likely bolster the
economic outlook, stocks and the dollar.
"Supply and demand ultimately call the tune in commodity
prices, and we have had a decline in domestic demand," said
Joseph Battipaglia, market strategist at Stifel Nicolaus in
Yardley, Pennsylvania.
"As long as demand keeps falling, I think you'll see more
pressure on energy prices, and that ultimately is very good
because it helps the consumer get some relief."
Although far from robust, the latest snapshots on durable
goods, consumer sentiment and new home sales soothed concerns
about the U.S. economy after weak readings on jobs and new home
sales on Thursday pushed U.S. stocks down more than 2 percent.
"Today we did a back-flip. Today's data were a reversal of
yesterday's numbers," said Colin Lundgren, head of
institutional fixed-income at RiverSource Investments in
Minneapolis.
Before 1 p.m., the Dow Jones industrial average <> was
up 31.43 points, or 0.28 percent, at 11,380.71. The Standard &
Poor's 500 Index <.SPX> was up 5.50 points, or 0.44 percent, at
1,258.04. The Nasdaq Composite Index <> was up 21.43
points, or 0.94 percent, at 2,301.54.
Investors snapped up U.S. shares in a range of sectors,
including technology and consumer goods.
Shares of big manufacturers, such as United Technologies
<UTX.N>, were another standout sector after data showed an
unexpected jump in orders for long-lasting durable goods.
The economic data "was good enough news to get some buyers
off the sidelines, and oil's being down brought in even more,"
said Hugh Johnson, chief investment officer at Johnson
Illington Advisors in Albany, New York.
In Europe a profit warning by Munich Re <MUVGn.DE> knocked
down insurers, helped push European shares slightly lower and
overshadowed the U.S. economic data that investors warmed to.
Shares of Munich Re, the world's second-biggest reinsurer,
tumbled almost 13 percent before paring some losses to close
off 7.3 percent.
On the upside, Danone <DANO.PA> surged 7.7 percent after
the food and beverage group lifted its 2008 operating margin
target and confirmed 2008 sales and profit growth outlook.
The FTSEurofirst 300 <> index of top European shares
ended down 0.09 percent at 1,169.70 points, after falling more
than 1 percent during the session.
Optimism about the U.S. government's housing rescue
package, coupled with the less grim economic data and worries
about rising interest rates, led investors to pull cash out of
U.S. and euro zone government debt.
Euro zone government bonds fell on reports that showed U.S.
new home sales were stronger than expected in June and consumer
sentiment rebounded from a 28-year low in July.
September Bund futures <FFGBLU8> fell to a session low of
110.56 having traded around 110.95 before release of the two
reports.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
23/32 to yield 4.09 percent. The 30-year U.S. Treasury bond
<US30YT=RR> fell 47/32 to yield 4.69 percent.
Bonds eased on ideas that the Fed may be more likely to
raise interest rates to brake inflation amid signs of a
strengthening economy. In reports on Friday, U.S. consumer
sentiment rebounded in July from a 28-year low and business
investment rose unexpectedly in June.
New orders for long-lasting U.S. manufactured goods also
rose unexpectedly in June on a surge in defense orders, and
data from the struggling U.S. housing market also helped
brighten what has been a gloomy picture. New home sales in June
were not as weak as expected.
However, in a sign of lingering woes for the market, U.S.
home foreclosure filings rose 14 percent in the second quarter,
real estate data firm RealtyTrac said.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.13 percent at 72.839. Against the
yen, the dollar <JPY=> rose 0.48 percent at 107.87.
The euro <EUR=> rose 0.16 percent at $1.57.
U.S. light sweet crude oil <CLc1> fell $1.36 percent to
$124.13 per barrel.
Spot gold prices <XAU=> rose $1.30 to $927.80.
Stocks overnight in Asia fell sharply, halting a four-day
rally, after weak U.S. housing and jobs data again reminded
investors of the global economy's fragile state.
Japan's Nikkei share average <> fell 2 percent and
European stocks opened as much as 1 percent lower.
Shares in the Asia-Pacific region excluding Japan
<.MIAPJ0000PUS> dropped 2.6 percent, an MSCI index showed.
(Writing bg by Herbert Lash. Editing by Richard Satran)
