* Wall Street gains in late-day rally on earnings hopes
* Oil prices rise with Wall Street, strong growth in China
* Treasuries gain on CIT jitters after 3-day sell-off
* US dollar recovers after hitting 6-week low on earnings
(Adds with close of U.S. markets)
By Herbert Lash
NEW YORK, July 16 (Reuters) - U.S. stocks staged a
late-day rally on Thursday on renewed hopes that earnings will
remain strong, while rebounding equities and news of surging
growth in China, the No. 2 energy consumer, helped lift crude
prices.
The turn in sentiment came before International Business
Machines Corp <IBM.N>, the biggest contributor to the Dow's
rise, was set to report results after the closing bell.
Wall Street rallied, with the benchmark Standard & Poor's
500 index posting the best four days since late March, when
the S&P 500 recovered from a 12-year low set earlier in the
month.
"Investors have ratcheted up expectations for earnings
almost across the board, so that optimism is still there even
if today's action is rather muted," said Paul Baiocchi, senior
market strategist at Delta Global Advisors in San Francisco.
After the bell, IBM <IBM.N> posted better-than-expected
quarterly results despite a sharp slide in revenue,
[], while quarterly profits at Google Inc <GOOG.O>
also were stronger than expected despite a tough advertising
market. []
The Dow Jones industrial average <> shot up 95.61
points, or 1.11 percent, to close at 8,711.82. The Standard &
Poor's 500 Index <.SPX> advanced 8.06 points, or 0.86 percent,
to 940.74. The Nasdaq Composite Index <> rose 22.13
points, or 1.19 percent, to 1,885.03.
European shares hit a one-month closing high on improved
sentiment following JPMorgan's results and data that showed
the number of U.S. workers claiming new jobless benefits fell
last week to their lowest since January.
The seasonally adjusted government data was again
distorted by earlier layoffs in the automotive industry.
[]
The FTSEurofirst 300 <> index of top European shares
ended 0.4 percent higher at 866.81 points, its fourth straight
daily gain.
Asian shares across the region outside of Japan
<.MIAPJ0000PUS> rose 1.3 percent to their highest since
mid-June, while Japan's benchmark Nikkei <>
underperformed with a rise of 0.8 percent.
BONDS UP ON CIT SAFETY BID
Risk aversion had earlier swept markets, pushing up U.S.
government debt prices and dampening commodity prices after
mixed economic data and concern about the possible failure of
U.S. lender CIT <CIT.N> spurred caution.
U.S. Treasuries' prices rose, supported by some bargain
hunting after a three-day sell-off, and by safe-haven buying,
given the concern about the potential CIT failure.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
up 10/32 in price to yield 3.57 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 2/32 in price to yield 0.99
percent.
Worries about earnings reports on Friday from Citigroup
<C.N> and Bank of America <BAC.N> also capped investor
enthusiasm and contributed to volatility on Wall Street.
A fall in a reading of the Federal Reserve Bank of
Philadelphia's index of business conditions in the U.S.
Mid-Atlantic region to minus 7.5 in July from minus 2.2 in
June also helped push up bond prices. []
"We are in a difficult position at the moment because we
are caught on the cusp between is this a sense of sustainable
recovery or a possibility of a relapse?" said Richard McGuire,
fixed income strategist at RBC Capital Markets in London.
"There's no real convincing evidence yet on either side,"
he said.
DOLLAR DROPS, COMMODITIES MIXED
The U.S. dollar initially fell to a six-week low against
major currencies after JPMorgan Chase & Co reported strong
results, providing further evidence of recovery.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.10 percent at 79.237.
The euro <EUR=> was up 0.30 percent at $1.4147, and
against the yen, the dollar <JPY=> was down 0.50 percent at
93.79.
U.S. crude oil <CLc1> rose 48 cents to settle at $62.02 a
barrel, while London Brent <LCOc1> eased 34 cents to $62.75 a
barrel ahead of the August contract's expiry.
The gains, which added to Wednesday's rally of more than
$2 triggered by a U.S. report showing sliding domestic crude
inventories, coincided with Wall Street's afternoon bounce.
"Another late rally and coinciding with an S&P 500 rally,
although it's arguable who's watching whom more closely," said
Tim Evans, oil analyst at Citi Futures Perspective in New
York.
U.S. gold futures ended lower after trading in a tight
range as bullion investors looked for a new catalyst from
markets outside of the commodities sector to fuel the metal's
recent rally amid inflation concerns. []
August futures <GCQ9> fell $4 to settle at $935.40 an
ounce in New York.
Copper ended down, giving back a fraction of the week's
strong gains, even though upbeat U.S. corporate earnings and
China's robust growth data provided fresh signs that the worst
may be over for the world economy. []
China reported economic growth rose to 7.9 percent in the
second quarter, beating forecasts. []
Copper for September delivery <HGU9> in New York slipped
0.25 cent to close at $2.3895 a pound.
(Reporting by Rodrigo Campos, Ellen Freilich, Steven C.
Johnson in New York; Atul Prakash, David Sheppard and Emelia
Sithole-Matarise in London; Writing by Herbert Lash; Editing
by Jan Paschal)
