US STOCKS-Wall St jumps on China yuan move, technicals weigh

                                

                                
 * China vows to allow a flexible yuan exchange rate
                                
 * Stocks may be over-stretched from technical perspective
                                
 * Dow up 0.9 pct, S&P up 0.8 pct, Nasdaq up 0.7 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
                                
(Updates to midday, changes quote, byline)
                                
 By Rodrigo Campos
                                
 NEW YORK, June 21 (Reuters) - U.S. stocks rose on Monday
but were off their session highs as China's vow to allow a
flexible yuan invigorated optimism in the global recovery and
raised the sales outlook for U.S. multinational companies.
                                
 Energy and materials shares led the way up as commodities
were boosted by the yuan move. Among U.S.-based multinationals,
Caterpillar Inc <CAT.N> gained 2.6 percent to $67.55, while
Freeport-McMoRan Copper & Gold Inc <FCX.N> jumped 6 percent to
$69.88. For a factbox on company revenues' China exposure see
[ID:nN21231330].
                                
 But Monday's gains moved the S&P 500 up more than 8 percent
in the last 10 trading days, leaving the market vulnerable from
a technical perspective.
                                
 "Today's move is encouraging, but the market is very
stretched in a near-term basis," said John Schlitz, chief
market technician at Instinet in New York.
                                
 "You've come into the week with most of the daily
indicators very overbought, so we're kind of advising against
chasing this strength. From a trading perspective it's too late
to chase this move."
                                
 The Dow Jones industrial average <.DJI> gained 99.69
points, or 0.95 percent, to 10,550.33. The Standard & Poor's
500 Index <.SPX> rose 9.30 points, or 0.83 percent, to
1,126.81. The Nasdaq Composite Index <.IXIC> added 16.34
points, or 0.71 percent, to 2,326.14.
                                
 The S&P 500 broke through 1,130, the midpoint between its
2010 high- and low-points and a key technical retracement, but
could face resistance above that level.
                                
 China's yuan surged the most since its revaluation in 2005,
and global markets gained following the surprise weekend
announcement by China's central bank that it would allow
greater flexibility for the currency. For details, see
[ID:nN20208975]
                                
 The move is expected to boost purchasing power and demand
in China, the world's third largest economy. A higher yuan
would also help temper inflation by pushing down import prices,
which would also make foreign goods more affordable.
                                
 "Companies that produce durable goods like Caterpillar will
benefit from this," said Randy Frederic, director of trading
and derivatives at Schwab Center for Financial Research in
Austin, Texas.
                                
 "The assumption is that the yuan maintains its increased
valuation (against) the dollar in the long-term, so Chinese
people will have the ability to purchase U.S. market goods."
                                
 Among the top performers, Dow component Alcoa Inc <AA.N>
shot up 8.9 percent to $12.10, posting its strongest day so far
in 2010.
                                
 Retailers, however, were hit on the expectation of higher
costs on imports from China. The S&P retail index <.RLX> shed
0.4 percent.
                                
 An internal BP Plc <BP.L><BP.N> document released by a U.S.
lawmaker estimated that a worst-case scenario rate for the Gulf
of Mexico oil spill could be about 100,000 barrels per day, far
higher than the current U.S. government figure. BP's
U.S.-listed shares slid 2.6 percent to $30.93. [ID:nN20211308]
 (Additional reporting by Matt Lynley; Editing by Padraic
Cassidy)