* Drop in weekly U.S. jobs claims supports global rally
* Euro climbs to 2 month peak on higher risk appetite
* Benchmark 10-year U.S. Treasury yields above 3 percent
By Daniel Bases
NEW YORK, July 8 (Reuters) - Global stock markets rose on a
ray of hope from upbeat U.S. jobs data on Thursday, while the
euro hit a two-month peak against the low-yielding U.S. dollar
on prospects for strong corporate earnings.
Investor risk appetite improved after weekly first-time
U.S. jobless claims dropped to their lowest level in two
months, while several top U.S. retail chains posted
better-than-expected June sales. For details, see
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The encouraging economic signs helped propel U.S. Treasury
yields above 3 percent. In Europe, the U.S. data plus some
clarity on European bank stress tests pushed German Bund
futures to their lowest level in two weeks.
"The (U.S.) data we're getting this morning is confirmation
that June wasn't a terrible month, and July starts the
back-to-school (period)," said John Canally, investment
strategist and economist for LPL Financial in Boston.
"It's good to see there was some demand in June."
Canally said the jobless data was muddied by several
factors, including U.S. holidays, the Gulf of Mexico oil spill,
and the failure so far to extend unemployment benefits.
Australia's improving employment market kick-started the
move to higher-risk assets and away from the safe-haven
greenback. []. For similar reasons, gold eased
below $1,200 an ounce.
Crude oil prices rose above $75 a barrel, reflecting stock
market gains, U.S. jobless data and reports showing a fall in
U.S. crude inventories.
In late-morning trade, the Dow Jones industrial average
<> rose 64.10 points, or 0.64 percent, to 10,082.38. The
Standard & Poor's 500 Index <.SPX> gained 6.39 points, or 0.60
percent, to 1,066.66. The Nasdaq Composite Index <>
climbed 12.71 points, or 0.59 percent, to 2,172.18.
The rise extended Wednesday's gains, the best one-day
advance in about six weeks, after a positive earnings outlook
from State Street Corp <STT.N> bolstered hopes for the coming
earnings season.
According to Thomson Reuters data, quarterly earnings of
S&P 500 companies are expected to rise 27.1 percent in the
second quarter after surging 58.3 percent in the first period.
The MSCI world equity index <.MIWD00000PUS> rose nearly 1
percent to a 1-1/2 week high. The Thomson Reuters global stock
index <.TRXFLDGLPU> also rose about 1 percent.
The FTSEurofirst 300 index <> gained nearly 1
percent, led by battered banking stocks as details of the
sector's stress tests started to emerge.
In Japan, the Nikkei <> ended up 2.8 percent, buoyed
by short-covering from investors who believe the benchmark's
slide to a seven-month low this week was overdone.
EURO GAINS
Europe named 91 banks taking part in a test into the health
of its banking system on Wednesday -- including many regional
banks where markets suspect most of the sore spots reside -- as
it seeks to restore confidence in the sector.
European Central Bank President Jean-Claude Trichet said
after the bank left interest rates on hold that appropriate
action would be taken where needed on bank balance sheets.
Trichet added that the global economy and foreign trade may
recover more strongly than projected, further supporting euro
zone exports. However the area's economy is expected to grow
"at a moderate and still uneven pace in an environment of high
uncertainty."
The euro rose 0.38 percent to $1.2682 <EUR=>, extending a
strong run after hitting a four-year low of $1.1876 in early
June. The greenback gained 0.98 percent at 88.56 yen <JPY=>.
"The euro continued to be supported by the overall elevated
level of risk appetite," said Omer Esiner, a chief market
analyst at Commonwealth Foreign Exchange in Washington, D.C.
The Australian dollar gained about 1.6 percent on the day
against the U.S. dollar to $0.8782 <AUD=D4>.
The International Monetary Fund raised its U.S. growth
forecast slightly to 3.3 percent for 2010 and 2.9 percent for
2011, but said unemployment would remain above 9 percent for
both years and inflation would remain low.
The IMF also sees the greenback depreciating moderately
over the next five years.
Benchmark 10-year U.S. Treasuries fell 14/32 of a point in
price pushing the yield to 3.04 percent <US10YT=RR>.
The two-year German government bond yield <DE2YT=TWEB>
climbed to 0.733 percent, reaching highs not seen since the end
of April.
Spot gold fell 1.03 percent to $1,189.50 <XAU=> while crude
oil traded up 1.7 percent to $75.33 a barrel <CLc1>.
(Additional reporting by Natsuko Waki, Edward Krudy, Vivianne
Rodrigues, Tricia Wright, Aiko Hayashi, Shinichi Saoshiro;
editing by Jeffrey Benkoe)
