* U.S., European factory data lift sentiment
* Oil rises above $92 a barrel on growth expectations
* Dip in Chinese PMI relieves fears of more tightening
* Euro falls on persistent European debt concerns
(Updates with European markets' close)
By Walter Brandimarte
NEW YORK, Jan 3 (Reuters) - U.S. and European stocks
resumed their rally in the first trading session of 2011 on
Monday on stronger global manufacturing data, while oil rose as
the outlook for growth increased optimism about demand.
U.S. Treasuries prices fell as the data -- including a
pickup in U.S. manufacturing growth last month -- suggested the
economic recovery continues to gain momentum, encouraging
investors to take on more risk.
The Institute for Supply Management said U.S. manufacturing
grew for a 17th straight month following news of faster growth
in European manufacturing as well. For details, see
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In another recent positive report, China's factory
inflation slowed in December, removing some pressure from the
Chinese central bank to slow down the economy.
[].
The three main U.S. stock indexes jumped more than 1
percent on Monday following the data.
"There is a lot of money in cash, a lot of money in bonds
that would like out of bonds. It's only natural, with the
economic improvement, it's finding its way to equities," said
Stephen Massocca, managing director at Wedbush Morgan in San
Francisco.
The big test for the U.S. economy lies on Friday when the
government will publish its widely watched nonfarm payrolls
report.
The Dow Jones industrial average <> jumped 124.19
points, or 1.07 percent, to 11,701.70, while the Standard &
Poor's 500 Index <.SPX> rose 16.98 points, or 1.35 percent, to
1,274.62. The Nasdaq Composite Index <> gained 49.31
points, or 1.86 percent, to 2,702.18.
In Europe, the the FTSEurofirst 300 index <> of top
stocks unofficially closed 0.9 percent higher at 1,131.59 on a
broad rally, led by construction and industrial shares. Trading
was thin, with markets closed in Britain and parts of Asia.
The MSCI All-Country World Index <.MIWD00000PUS> rose 0.9
percent, after finishing 2010 with gains of 10 percent, back to
its strongest level since September 2008.
Emerging market stocks jumped 1.3 percent, according to
another MSCI index <.MSCIEF>.
Oil extended its rally on optimism the global economic
recovery was gaining momentum. U.S. crude futures <CLc1> rose
0.8 percent to $92.11 a barrel.
EURO STARTS LOWER
Worries about the euro-zone debt crisis weighed on the
euro.
The euro started the first trading day of 2011 lower and
analysts said it is likely to extend its downtrend as investors
avoid the single currency due to nagging concerns about the
euro-zone debt crisis.
"The euro is trading with a heavier tone. I think traders
are trying to cut back their exposure on the euro as volumes
normalize and given continued problems in the euro zone," said
Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington.
The euro <EUR=> was down 0.12 percent at $1.3361 from a
previous session close of $1.3377, after hitting a session low
around $1.3251.
The dollar rose 0.15 percent against a basket of major
currencies, according to the U.S. Dollar Index <.DXY>. Against
the Japanese yen, the dollar <JPY=> was up 0.63 percent at
81.66.
Also supporting dollar gains was a rise in U.S. Treasury
yields resulting from investors' renewed appetite for risk.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 22/32 in price, sending its yield up to 3.3712 percent.
Gold prices held steady.
(Additional reporting by Chuck Mikolajczak, Gertrude
Chavez-Dreyfuss, and Emily Flitter in New York, Nigel
Stephenson in London; Editing by Kenneth Barry)
