* U.S. stocks rise on hope recession bottom near
* Dollar gains as worries about growth boost risk aversion
* Oil falls, U.S. crude stocks highest in nearly 20 years
* U.S. bond prices rise as data shows still weak economy
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, April 15 (Reuters) - U.S. stocks rose on
Wednesday after housing and factory data, along with a Federal
Reserve report, lifted hopes the U.S. recession is easing even
as other news showed the global economy is still contracting,
which boosted the allure of the safe-haven dollar.
Oil fell marginally as declining consumer demand pushed the
level of U.S. crude stocks last week to their highest since
September 1990. But inflation fears and bullish sentiment in
U.S. stock markets kept prices from falling further.
While investors took heart from the glimmer of hope offered
by different reports, government data and corporate news from
around the world also provided a sobering economic outlook.
U.S. Treasury debt prices mostly gained on data showing
U.S. industrial output shrank more than expected in March amid
nary a whiff of inflation.
Germany's wholesale prices suffered their biggest fall in
22 years and on Thursday, China is poised to report its slowest
quarterly growth in nearly two decades. That could dampen hopes
it can lift the rest of the world out of recession.
All three major U.S. stock indexes turned positive in late
trading in a choppy session.
The Fed said the U.S. economy continued to weaken in March
and early April, but the speed of contraction was fading amid
scattered signs the country's recession may be nearing an end.
[]
"The Beige Book is feeding into the whole general picture
of the market," said Carl Birkelbach, chairman and chief
executive of Birkelbach Investment Securities in Chicago,
referring to the Federal Reserve's monthly compilation of
anecdotal information from the U.S. central bank's business
contacts.
"It indicated that there would be negative things out
there, but it also used the word 'bottoming,' and that was
positive," Birkelbach said.
Shares of major U.S. homebuilders surged after the National
Association of Home Builders said sentiment rose in April to
the highest level since last October.
The NAHB/Wells Fargo Housing Market index increased to 14
from 9 in March, pushing the Dow Jones U.S. Home Construction
Index <.DJUSHB> up 6 percent.
American Express Co <AXP.N> said U.S. credit card defaults
rose slightly in March, suggesting that after months of
deterioration, consumers' ability to pay bills is stabilizing.
Another sign of hope came in a separate Fed report that
showed manufacturing activity in New York state contracted less
severely in April after hitting a record low the previous
month.
The Dow Jones industrial average <> gained 109.44
points, or 1.38 percent, to 8,029.62. The Standard & Poor's 500
Index <.SPX> rose 10.56 points, or 1.25 percent, to 852.06. The
Nasdaq Composite Index <> added 1.08 points, or 0.07
percent, to 1,626.80.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.10 percent at 84.88.
Against the yen, the dollar <JPY=> rose 0.6 percent to
99.35 yen, well above session lows of 98.15 yen.
The euro <EUR=> fell 0.2 percent to $1.3221.
"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."
Benchmark 10-year Treasury notes <US10YT=RR> traded 5/32
higher in price to yield 2.77 percent, while two-year notes
<US2YT=RR> traded unchanged in price to yield 0.86 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.
Oil fell slightly after U.S. crude oil stocks rose last
week to their highest level in nearly two decades.
U.S. crude for May delivery <CLc1> settled down 16 cents
at $49.25 a barrel after a day of see-saw trading. ICE Brent
crude <LCOc1> settled down 17 cents at $51.79.
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."
Gold rose slightly as strong physical demand from top
bullion consumer India offset worries due to a surprise drop in
U.S. consumer inflation, which could dent the metal's allure as
an inflation hedge.
U.S. gold futures for June delivery <GCM9> settled up $1.50
at $893.50 an ounce in New York.
(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 Dan
Grebler)
