* 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) - Global 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 climbed to $1.30, the highest since July 20,
getting a boost from investors' positive reaction to results of
tests of European banks' health released late on Friday.
Sales of single-family U.S. 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," said
Michael O'Rourke, chief market strategist at BTIG LLC, in New
York.
O'Rourke referred to an Obama administration tax break for
home buyers to stimulate the economy.
The Dow Jones industrial average <> closed up 100.81
points, or 0.97 percent, at 10,525.43. The Standard & Poor's
500 Index <.SPX> gained 12.35 points, or 1.12 percent, to
1,115.01. The Nasdaq Composite Index <> rose 26.96
points, or 1.19 percent, to 2,296.43.
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 closed at a five-week high, helped by the
U.S. housing data, with the banking sector among the top
performers following the bank stress test results.
The tests were aimed partly at opening the door to funding
markets for a batch of southern European banks and lowering
costs for other lenders. []
Seven of 91 banks failed the test, including five from
Spain, and another 17 barely passed the EU tests, which have
been widely criticized as not demanding enough.
The pan-European FTSEurofirst 300 <> index of top
shares closed 0.4 percent higher at 1,048 points.
World stocks as measured by MSCI <.MIWD00000PUS> rose 1.15
percent and the Thomson Reuters global stock index
<.TRXFLDGLPU> gained 1 percent.
After Friday's release of the European bank stress test
results and Monday's strong U.S. housing data for June, the
euro <EUR=> touched $1.30 against the dollar, the highest since
July 20. On electronic trading platform EBS, it later hovered
around $1.2992, still up 0.68 percent.
Investors were upbeat about a series of reports in the past
week showing the broader European economy was stronger than
thought.
Against the Japanese yen, the dollar <JPY=> was down 0.69
percent at 86.84 from a previous session close of 87.440.
Purchasing managers' indexes indicated third-quarter euro
zone growth of around 0.6 to 0.7 percent. German business
sentiment also posted a record jump in July to its highest
level in three years. Britain, not in the euro zone, added to
the mix with an economy growing twice as quickly 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 were mixed as benchmark 10-year Treasury
note's 3 percent yield drew some buyers.
"The overarching factor (that pushed) yields higher was
relief that the stress tests had come and gone without major
incident," said Robert Tipp, chief investment strategist for
Prudential Fixed Income, whose team helps oversee approximately
$240 billion in fixed income assets.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32, with the yield at 2.9942 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
0.5964 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
unchanged with the yield at 4.0202 percent.
U.S. crude oil prices turned positive after the economic
data, having been pressured earlier on Tropical Storm Bonnie's
fade from the Gulf of Mexico.
Oil <CLc1> was trading at around $79 a barrel, flat after
rising on the U.S. housing data. The price of gold <XAU=> fell
$7.35, or 0.62 percent, to $1181.20, as the metal lost some of
its safe-haven appeal due to the European stress test results,
robust U.S. company earnings and vigorous euro zone data.
(Additional reporting by Vivianne Rodrigues, Ellen Freilich,
Ryan Vlastelica in New York; Editing by Dan Grebler)
