GLOBAL MARKETS-Oil, stocks rally on surprisingly strong data

                                
  
                                
 * U.S. stocks rise after services sector, home sales data
                                
 * Oil hits 18-month high over $86 a barrel on data
                                
 * U.S. 10-year bond yield hits 4 pct on recovery outlook
                                
 * U.S. dollar falls versus yen, but recovers some on data
 (Updates with close of U.S. markets)
                                
 By Herbert Lash
                                
 NEW YORK, April 5 (Reuters) - Crude oil prices hit 18-month
highs and U.S. stocks rallied on Monday after surprisingly
strong data on the U.S. non-manufacturing sector and homes
sales spurred hopes that the recovery is gaining momentum.
                                
 Data that showed the services sector, the largest segment
of the U.S. economy, grew in March at its fastest pace in
almost four years dissipated risk aversion and squashed prices
of safe-haven government debt. For details:[ID:nN05117920]
                                
 The yield of the benchmark U.S. Treasury 10-year note,
which moves inversely to price, rose to 4 percent for the first
since last June.
                                
 A weaker dollar and higher risk appetite because of the
encouraging data, which included a rise in non-farm payrolls on
Friday, lifted asset classes across the board -- from equities
to commodities such as oil, copper, gold and precious metals.
Most financial markets had been closed on Friday for the Good
Friday holiday, and investors had not factored in the jobs data
until Monday.
                                
 Shares of natural resources companies led Wall Street's
gains on expectations an improving economy will boost demand.
                                
 "Economic optimists have taken control of the market," said
Gene McGillian, an analyst at Tradition Energy in Stamford,
Connecticut.
                                
 "We're in uncharted territory. I think we can keep trending
higher," he said.
                                
 The main U.S. stock indexes closed their fifth straight
week of gains last week and fourth straight positive quarter.
                                
 MSCI's all-country world index for equities <.MIWD00000PUS>
rose 0.4 percent. Many markets around the globe were shut for
holidays on Monday.
                                
 The Dow industrials and S&P 500 ended at 18-month highs,
with the two U.S. equity benchmarks closing in on the
psychological barriers of 11,000 and 1,200, respectively.
                                
 The Dow Jones industrial average <.DJI> closed up 46.48
points, or 0.43 percent, at 10,973.55. The Standard & Poor's
500 Index <.SPX> rose 9.34 points, or 0.79 percent, at
1,187.44. The Nasdaq Composite Index <.IXIC> gained 26.95
points, or 1.12 percent, at 2,429.53.
                                
 The Institute for Supply Management said on Monday its
services index jumped to 55.4, its best reading since May 2006,
while the National Association of Realtors reported its Pending
Home Sales Index rose 8.2 percent to a reading of 97.6.
                                
 The government on Friday had reported that U.S. employers
added 162,000 non-farm jobs in March.
                                
 A holiday-thinned market kept trading volume light on
Monday, with most European markets closed, as well as markets
in Australia, China, Hong Kong, Taiwan and New Zealand.
                                
 The dollar retreated from a seven-month high against the
yen as investors booked profits following four days of gains
for the U.S. currency. [ID:nN05186249]
                                
 Higher oil and metals prices helped propel the Canadian
dollar to a 20-month high against the U.S. currency, leaving it
within striking distance of parity, while the euro slipped.
                                
 Oil prices rose more than 2 percent to their highest since
October 2008 on the surprisingly strong U.S. economic data.
                                
 U.S. crude oil for May delivery <CLc1> settled up $1.75 to
$86.62 a barrel. Prices have risen 8.3 percent since March 26,
in their steepest five-day winning streak since December.
                                
 Brent crude <LCOc1> rose $1.87 to settle at $85.88 a
barrel.
                                
 Strong industrial and investment demand because of an
improved outlook in the automotive sector drove palladium
prices to a two-year high above $500 an ounce. [ID:nN05181696]
                                
 Copper vaulted to a 20-month peak. The contract for May
delivery <HGK0> settled up 4.75 cents at $3.6315 a pound in New
York.
                                
 U.S. June gold futures <GCM0> settled up $7.70 at $1,133.80
an ounce.
                                
 The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 12/32 in price to yield 3.99.
                                
 The dollar was down 0.2 percent at 94.34 yen <JPY=>. It
earlier hit as high as 94.78 yen on electronic trading platform
EBS, the highest since late August.
                                
 The euro <EUR=> slid 0.2 percent to $1.3478.
 (Reporting by Steven C. Johnson, Richard Leong, Joshua
Schneyer, Frank Tang and Chris Kelly in New York; Christopher
Johnson in London; writing by Herbert Lash; Editing by Leslie
Adler)