* Dow, S&P 500 rise on factory data; European shares fall
* Dollar gains as worries about growth boost risk aversion
* Oil falls, U.S. crude stocks highest in nearly 20 years
* U.S. bond prices fall on rising U.S. equities
(Recasts, updates U.S. markets; changes dateline, previous
LONDON)
By Herbert Lash
NEW YORK, April 15 (Reuters) - Most U.S. stocks gained on
Wednesday as better-than-expected regional factory data lifted
hopes the U.S. recession may be moderating but the dollar
firmed on fresh evidence the global economy is still
contracting.
Falling U.S. and Spanish consumer prices added to the
allure of safe-havens such as the U.S. dollar and government
debt in Europe, and pressured equity markets around the world.
Persistent signs of a weak global economy in most markets
lifted the aversion to risk. U.S. industrial output shrank more
than expected in March and Germany's wholesale prices suffered
their biggest fall in 22 years, data showed.
And China on Thursday is poised to report its slowest
quarterly growth in nearly two decades, damping hopes Chinese
growth can lift the rest of the world out of recession.
Corporate news also weighed on sentiment after UBS, the
largest Swiss bank, reported a $1.7 billion quarter loss and
thousands more job cuts, while Wal-Mart Stores Inc <WMT.N> said
it does not anticipate a quick end to the U.S. recession.
A lack of clarity in Intel Corp's <INTC.O> revenue forecast
led the Nasdaq to fall and raised fresh worries about corporate
profits in a tough economic environment.
"There are mixed signals," said Terry Morris, senior vice
president and senior equity manager for National Penn Investors
Trust Co. in Reading, Pennsylvania.
"These businesses don't know what is coming through the
door in the next few months -- they are as uncertain as you or
I," he said.
After 1 p.m. (1700 GMT), the Dow Jones industrial average
<> was up 67.22 points, or 0.85 percent, at 7,987.40. The
Standard & Poor's 500 Index <.SPX> was up 3.65 points, or 0.43
percent, at 845.15. The Nasdaq Composite Index <> was down
8.42 points, or 0.52 percent, at 1,617.30.
Advancing volume on the New York Stock Exchange outpaced
falling volume.
Output at U.S. factories, mines and refineries dropped 1.5
percent in March, capping a brutal quarter as businesses pared
orders and cut inventory, a Federal Reserve report said.
But investors favored a separate Fed report that showed
manufacturing activity in New York state contracted less
severely in April, after diving to a record low the previous
month.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.16 percent at 84.93. Against
the yen, the dollar <JPY=> gained 0.50 percent at 99.27.
The euro <EUR=> fell 0.28 percent at $1.3215.
"Risk aversion remains the driver for the dollar," said
David Gilmore, a partner at FX Analytics in Essex, Connecticut.
"When we see evidence of weakness in the economy, it promotes
higher levels of risk aversion."
U.S. Treasuries retreated as most U.S. equities gained and
investors took profits on a three-day bond rally.
"Stocks turning higher definitely hurt bonds, even though
the economic reports were more negative than positive," said
Mary Ann Hurley, vice president of fixed-income trading at
D.A. Davidson & Co in Seattle.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
6/32 in price to yield 2.81 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 1/32 in price to yield 0.87 percent.
European shares closed lower, with UBS <UBSN.VX> leading
banks down, while oils and miners also fell.
The FTSEurofirst 300 <> index of top European shares
fell 0.2 percent to close at 788.21 points.
Euro zone government bond prices extended gains as
investors concerned about the global economy sought safer
assets.
Oil rose slightly but remained below $50 a barrel after
U.S. crude oil stocks rose last week to their highest level in
nearly two decades.
U.S. light sweet crude oil <CLc1> fell 4 cents to $49.39 a
barrel.
Weekly fuel supply data from the world's top energy
consumer showed a 5.6 million barrel rise in crude stocks last
week, almost three times the build of 1.9 million barrels that
analysts polled by Reuters had expected. []
U.S. crude stocks last week reached 366.7 million barrels,
according to the government data, the highest total since the
week ended Sept. 21, 1990.
"Another week, another bearish inventory report," said Tom
Bentz, senior commodity analyst at BNP Paribas Commodity
Futures Inc. "It's been negative week after week and yet the
market hasn't collapsed."
"It's defying fundamental logic, focusing instead on the
dollar, the strength in the stock market and inflation fears --
that's what's keeping the oil price up."
Spot gold prices <XAU=> rose $2.15 to $891.00 an ounce.
Asian stocks pulled back from six-month highs. MSCI's index
of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> fell 1.4
percent, and Japan's Nikkei average <> fell 1.1 percent.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Additional reporting by Chuck Mikolajczak, Wanfeng Zhou
and Pedro Nicolaci da Costa in New York; Brian Gorman,
Catherine Bosley and Jane Merriman in London)
(Editing by Theodore d'Afflisio)
