* Dollar hits 7-month high against yen, firms against euro
* Strong manufacturing data across the world lifts mood
* European shares hit 18-month closing high
* Wall Street up over 0.5 pct
By Walter Brandimarte
NEW YORK, April 1 (Reuters) - The dollar hit a seven-month
high against the yen and global stocks rallied on Thursday as
data showing strong growth in manufacturing activity in Asia,
Europe and the United States raised optimism about the economic
recovery.
Oil rose to an 18-month high as the economic data prompted
buying by funds on the first day of the second quarter, and the
higher crude prices helped drive up energy shares on both sides
of the Atlantic.
European shares finished at an 18-month closing high, and
on Wall Street the Dow industrials edged closer to the 11,000
mark.
Data on Thursday showed factories across China, Europe, the
United States and Brazil cranked up production at a
faster-than-expected pace, with the Institute for Supply
Management reporting that U.S. manufacturing sector grew at its
fastest pace in more than five years in March. For details, see
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Commodities and emerging market assets jumped, while prices
for safe-haven Treasury bonds retreated as investors started
the second quarter with renewed appetite for higher-yielding
assets.
Data showing new U.S. jobless claims fell more than
expected last week also boosted sentiment as investors saw more
signs that the strong economic recovery in emerging markets is
also taking root in the industrialized countries.
The drop in U.S. jobless claims also raised hopes for
Friday's key U.S. monthly payrolls report, which is expected to
show the economy added 190,000 jobs in March -- an outcome that
would likely boost expectations for higher U.S. interest
rates.
"We had a slew of nice upside surprises from manufacturing
data in China, Europe, the UK. So that's a good start to the
month," said Matthew Strauss, senior strategist at RBC Capital
Markets in Toronto.
"And if we get a good payrolls number tomorrow, that's a
dollar-positive," he added.
The Dow Jones industrial average <> rose 69.53 points,
or 0.64 percent, to 10,926.16 while the Standard & Poor's 500
Index <.SPX> was up 8.97 points, or 0.77 percent, at 1,178.40.
The Nasdaq Composite Index <> gained 9.01 points, or 0.38
percent, to 2,406.97.
Energy and materials shares led the S&P 500's gains as the
news suggested improving global demand for commodities. The S&P
energy index <.GSPE> rose 1.6 percent. The S&P materials index
<.GSPM> advanced 1.8 percent.
In Europe, the FTSEurofirst 300 index of top shares
<> rose 1.43 percent to 1,094.05, its highest close since
late September 2008.
Banks were the top gainers, with STOXX Europe 600 banking
index <.SX7P> up 1.9 percent.
Miners were also in demand as copper <MCU3> hit a 20-month
high on signals of improving demand. BHP Billiton <BLT.L>,
Anglo American <AAL.L>, Antofagasta <ANTO.L>, Rio Tinto
<RIO.L>, Xstrata <XTA.L> and ENRC <ENRC.L> rose 1.8 to 4.1
percent.
In Asia, Tokyo's Nikkei average rose to its highest level
in a year and a half, buoyed by the fall in the yen, which
makes it easier for Japanese exporters to sell their goods
abroad.
The MSCI All-Country World Index <.MIWD00000PUS> of global
stocks was up 1.09 percent, after posting a fourth consecutive
quarterly gain with a 2.7 percent rise in the first three
months of 2010.
The MSCI stock index for emerging markets <.MSCIEF> climbed
1.77 percent as the HSBC's China Purchasing Managers' Index
(PMI) showed first-quarter manufacturing output expanded at the
briskest clip in the survey's six-year history.
China's official purchasing managers index rose to 55.1 in
March from 52.0 in February, beating the median forecast of
54.5 in a Reuters poll of economists.
In Brazil, industrial production climbed 1.5 percent in
February, well above the 0.9 percent forecast by economists in
a Reuters poll.
Manufacturing activity in the euro zone also grew last
month at its fastest pace in over three years, data showed.
YIELD APPETITE RISES
The U.S. dollar rose as high as 93.89 yen <JPY=>, its best
level since August 2009. It was last at 93.86 yen, up 0.43
percent on the day.
The weakening of the yen was also spurred by talk that
Japanese investors will look for higher returns abroad now that
the new fiscal year has started.
The euro erased early losses and gained 0.45 percent
against the dollar to $1.3571. It also jumped to a session high
of 1.441 against the Swiss franc as traders mentioned talk of
intervention by the Swiss National Bank to prop up its
currency.
The pick-up in riskier assets put government bonds under
pressure. Benchmark 10-year Treasury prices <US10YT=RR> were
down 8/32, with the yield at 3.8646 percent.
The Chinese data also helped spur metals higher, with
copper <CMCU3> firming to a 20-month high as improving demand
sentiment combined with fund buying helped push prices up,
while nickel hit a near two-year high at $25,320.
Oil pushed to a near 18-month high, bolstered by talk of
fresh inflows from investors at the start of the new quarter.
U.S. crude for May delivery <CLc1> last traded with gains or
more than 1 percent, at $84.90 a barrel.
(Additional reporting by Steven C. Johnson in New York;
Editing by Leslie Adler)
