* Wall Street rallies on solid profits, recovery hopes
* Oil jumps as economic data raises economic recovery hope
* Dollar slips as risk sentiment improves on firmer stocks
* Government debt prices ease as stocks sap safe-haven bid
(Updates with U.S. markets activity; changes byline, dateline;
previous LONDON)
By Herbert Lash
NEW YORK, July 30 (Reuters) - Global equity markets rallied
and oil surged 5 percent on Thursday as solid earnings from
around the world coupled with encouraging economic data boosted
sentiment that had turned skittish earlier in the week.
Commodity prices jumped, with gold tracking hefty gains in
oil and copper up 4 percent after China soothed global markets
by reaffirming a loose monetary policy. Fears Chinese banks
were tightening credit had sparked a sell-off on Wednesday.
U.S. equity gains were broad-based, but economically
sensitive sectors such as materials were the biggest standouts.
The S&P materials sector index <.GSPM> gained 3.8 percent.
European equities closed at their highest in nearly nine
months, Britain's top share index ended close to a seven-month
high and Tokyo's main stock gauge hit its highest close in nine
months as stock markets rose worldwide.
MSCI's all-country world index <.MIWD00000PUS> gained 1.8
percent, spurred by strong or better-than-expected corporate
results and improving data.
Results from Honda Motor <7267.T> and Nissan Motor <7201.T>
in Japan, followed by the likes of BT Group <BT.L> in Britain
and Motorola Inc <MOT.N> and Tyco International Ltd <TYC.N> in
the United States boosted investors' sentiment.
"Increasingly it feels like the time is not right to worry
about this strength running out of steam just yet," said David
Jones, chief market strategist at IG Index.
A handful of diversified U.S. manufacturers posted results
that topped Wall Street estimates, boosting confidence as the
worst recession in decades lingers. For more see
[].
Still, companies including Tyco, Cummins Inc <CMI.N> and
Parker Hannifin Corp <PH.N> maintained a cautious view on the
economy.
John O'Brien, senior vice president at MKM Partners LLC in
Cleveland, said the trend was proving to be the investor's
friend.
"The positive momentum is carrying through, and earnings
for the most part have been better than anticipated," O'Brien
said. "I think that reflects that the economy is stabilizing."
At 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was up 142.08 points, or 1.57 percent, at 9,212.80. The
Standard & Poor's 500 Index <.SPX> was up 16.13 points, or 1.65
percent, at 991.28. The Nasdaq Composite Index <> was up
22.21 points, or 1.13 percent, at 1,989.97.
The FTSEurofirst 300 <> index of top European shares
finished 2.2 percent higher at 930.62.
The number of Americans collecting long-term unemployment
aid fell to the lowest in three months in mid-July, according
to government data that implied a slowing pace of layoffs as
the economy stabilizes. []
In Germany, unemployment unexpectedly fell in July for the
first time in nine months, aided by government measures ahead
of September's federal election. []
In Japan, industrial output rose in June for the fourth
month running and manufacturers forecast more gains to come,
suggesting that stimulus spending at home and abroad will prop
up demand for cars and consumer electronics. []
U.S. light sweet crude oil <CLc1> rose $3.18 to $66.53 a
barrel.
"Markets are rebounding with stocks higher, renewed
optimism and a weak dollar," said Tom Bentz, an analyst at BNP
Paribas Commodity Futures Inc. "Oil markets were oversold after
yesterday's sharp drop and jobless data may have also provided
additional support."
The U.S. dollar fell against major currencies as the rally
in equity and commodity markets on optimism about the economy
eroded safe-haven demand for the greenback. []
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 0.4 percent at 79.278.
The euro <EUR=> was up 0.23 percent at $1.4067. Against the
yen, the dollar <JPY=> was up 0.78 percent at 95.77.
U.S. Treasury debt prices eased, taking a cue from surging
stocks, which eroded the safe-haven appeal of lower-risk
securities like government debt. []
U.S. Treasury debt prices were lower. The benchmark 10-year
U.S. Treasury note <US10YT=RR> was down 15/32 in price to yield
at 3.72 percent. The 2-year U.S. Treasury note <US2YT=RR> was
down 3/32 in price to yield 1.21 percent.
Spot gold prices <XAU=> rose $5.30 to $934.30 an ounce.
The MSCI index of Asia-Pacific shares excluding Japan
<.MIAPJ0000PUS> rose nearly 1 percent, heading back toward
10-month highs after a sharp drop on Wednesday in the wake of a
5 percent sell-off in Shanghai.
Tokyo's Nikkei average <> gained 0.5 percent to hit
its highest close in nine months.
(Reporting by Ellis Mnyandu, Matthew Robinson, Wanfeng Zhou
and Chris Reese in New York, and Atul Prakash, Harpreet Bhal,
Kirsten Donovan and Rebekah Curtis in London; Writing by
Herbert Lash; Editing by James Dalgleish)
