* U.S. new home sales boost stocks, risk appetite
* Euro up versus dollar on upbeat European data
By Manuela Badawy
NEW YORK, July 26 (Reuters) - Stocks rose on Monday after
U.S. data showed a pick-up in new home sales, reviving hopes
for improvement in a tepid economic recovery, while the euro
firmed against the dollar on increased risk tolerance.
The euro also received a boost as investors reacted to the
results of bank stress tests released by the European Union
late on Friday.
Sales of single-family homes in June jumped 23.6 percent,
the largest increase since May 1980, from the prior month's
record low, pushing U.S. Treasury prices lower and supporting
oil prices. For details, see []
"There was a big revision down in the prior month, but then
obviously a rebound this month. We're still at these trough
levels, which we've been bouncing along. It's a good sign that
we did see an increase after the tax credit expired. Michael
O'Rourke, chief market strategist, at BTIG LLC, New York.
O'Rourke referred to an Obama administration initiative to
stimulate the economy by giving a tax break to U.S. home
buyers, but the provision has now expired.
The Dow Jones industrial average <> was up 65.47
points, or 0.63 percent, at 10,490.09. The Standard & Poor's
500 Index <.SPX> was up 7.33 points, or 0.66 percent, at
1,109.99. The Nasdaq Composite Index <> was up 12.92
points, or 0.57 percent, at 2,282.39.
U.S. stocks also got a lift from FedEx Corp <FDX.N> after
the bellwether raised its earnings outlook, sending its stock
up more than 4 percent. Stronger outlooks for transportation
firms like FedEx are seen as a sign of growing economic
demand.
European shares turned positive after the release of the
U.S. housing data, pushing the pan-European FTSEurofirst 300
<> index of top shares up 0.4 percent at 1,048 points.
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.9 percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> gained about 0.9 percent.
After Friday's release of the European bank stress test
results, the euro edged higher against the dollar but below its
highs as investors speculated the tests weren't strict enough
to support a rally in the euro zone single currency.
The euro <EUR=> was up 0.24 percent at $1.2935. Against the
Japanese yen, the dollar <JPY=> was down 0.22 percent at 87.25,
paring some of its losses after the U.S. housing data.
Investors however, were upbeat about a series of reports in
the past week showing the broader European economy was stronger
than thought.
Purchasing managers' indexes indicated third-quarter euro
zone growth of around 0.6-0.7 percent. German business
sentiment also posted a record jump in July to its highest
level in three years. And Britain, not in the euro zone, added
to the mix with an economy growing twice as fast as expected in
the second quarter.
"Despite the market's single-minded focus on the stress
tests the more important story was the surprisingly strong
economic data from the region (last week)," said Boris
Schlossberg, a director for currency research at GFT in New
York.
U.S. Treasuries fell after the improvement in new home
sales data, with benchmark 10-year notes <US10YT=RR> slipping
down 3/32. They yielded 3.02 percent, up from 2.99 percent
earlier in the day and 3 percent late Friday.
The 2-year U.S. Treasury note <US2YT=RR> was down 2/32,
with the yield at 0.6168 percent. The 30-year U.S. Treasury
bond <US30YT=RR> was down 9/32, with the yield at 4.0358
percent.
U.S. crude oil prices turned positive after the economic
data having been pressured earlier on Tropical Storm Bonnie's
fade.
Oil <CLc1> rose to $79.18 a barrel. The price of gold <XAU=>
fell $6.45, or 0.54 percent, to $1182.10, as the metal lost
some of its safe-haven appeal, European stress test results,
robust U.S. company earnings and vigorous euro zone data cut
into gold's appeal.
(Additional reporting by Vivianne Rodrigues, Ellen Freilich,
Ryan Vlastelica in New York, and Jeremy Gaunt in London;
Editing by Kenneth Barry)
