* Drop in weekly U.S. jobless 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) - Wall Street staged a late-day
surge on Thursday, extending its rally to three days on upbeat
U.S. jobs data that also helped European shares to 10-day highs
and the euro to a two-week peak.
The euro also benefited from the emergence of details
surrounding Europe's bank stress tests, heartening investors,
who saw criteria for the checks were no worse than markets
expected.For more, please see: []
An improvement in Australia's 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 and benchmark 10-year U.S.
Treasuries fell.
Risk appetite increased after weekly first-time U.S.
jobless claims dropped to their lowest level in two months,
offering a ray of hope for economic recovery.[]
"The euro is moving back up and that is a signal that
people are less defensive and a little more risky," said John
Massey, portfolio manager at SunAmerica Asset Management in
Jersey City, New Jersey.
The euro rose as high as $1.2711, its highest since
mid-May, according to Reuters data.
After a dip lower in midday trade, U.S. stocks closed up.
The Dow Jones industrial average <> rose 120.71 points,
or 1.20 percent, to 10,138.99. The Standard & Poor's 500 Index
<.SPX>, at one point lower on the day, finished up 9.98 points,
or 0.94 percent, at 1,070.25. The Nasdaq Composite Index also
erased earlier losses to end up 15.93 points, or 0.74 percent,
to 2,175.40 <>.
The indexes are up between 4 and 4.7 percent in the last
three sessions.
"The data we saw today was better than what we are used to
seeing ... it shed a bit of hope," said Steve Goldman, market
strategist at Weeden & Co in Greenwich, Connecticut.
"But there is still so much bearishness in the market that
it is causing stocks to swing in such a swift manner."
U.S. retailers gave a mixed picture as monthly chain store
sales rose, boosted by promotions. The S&P retail index <.RLX>
cut early losses to close flat on the day.
Consumer staples <.GSPS> were the S&P's best-performing
sector, with Costco Wholesale Corp <COST.O> rising 2.6 percent
at $55.71.
However, in the technology sector, chipmaker shares
weakened. The PHLX semiconductor index <.SOXX> fell 0.07
percent after a more than 5 percent gain on Wednesday.
European shares closed higher, led by bank stocks. The
FTSEurofirst 300 <> index of top European shares closed
up 0.95 percent at 1,015.56 points, the highest close since
late June. Thursday marked the third straight day of gains
after falls of more than 7 percent in the previous two calendar
weeks.
Financial stocks were among the top gainers, with the STOXX
Europe 600 banking index <.SX7P> rising 1.7 percent.
The MSCI world equity index <.MIWD00000PUS> rose 1.21
percent to a 1-1/2 week high. The Thomson Reuters global stock
index <.TRXFLDGLPU> also rose 1.17 percent.
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.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic of U.S. jobless claims, click
http://link.reuters.com/taf56m
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EURO GAINS
Europe named 91 banks taking part in a health test 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
appropriate action would be taken where needed on bank balance
sheets. He spoke after the ECB bank left interest rates on hold
at a record low 1.0 percent.
Trichet said the global economy and foreign trade may
recover more strongly than projected, further supporting euro
zone exports. The area's economy, however, is expected to grow
"at a moderate and still uneven pace in an environment of high
uncertainty," he said.
The euro rose 0.49 percent to $1.2696 <EUR=>, extending a
strong run after hitting a four-year low of $1.1876 in early
June. The greenback gained 0.70 percent at 88.31 <JPY=>.
The Australian dollar gained about 1.5 percent on the day
against the U.S. dollar to $0.8770 <AUD=D4>.
The U.S. Treasury said China's yuan is undervalued, but
refrained from saying Beijing was manipulating its currency
despite pressure to do so from U.S. manufacturers hurt by cheap
imports from China. []
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, saying it is "somewhat" overvalued
and greater currency flexibility in some countries will be
needed to support the global economy.
Benchmark 10-year U.S. Treasuries fell 13/32 of a point in
price, pushing the yield to 3.04 percent <US10YT=RR>.
"It's a low, low-yielding world," said Richard Gordon,
fixed-income strategist at Wells Fargo Securities in Charlotte,
North Carolina. "Slow growth is being priced in and there's no
inflationary pressure right now."
The German government two-year bond yield <DE2YT=TWEB> rose
5.2 basis points to 0.734 percent, having at one point raced up
to 0.745 percent, its highest level since the end of April.
Spot gold fell 0.32 percent, to $1,198.00 <XAU=> while
crude oil settled up 1.85 percent, at $75.44 a barrel <CLc1>.
(Additional reporting by Angela Moon, Matt Lynley, Edward
Krudy, Richard Leong, Natsuko Waki, Vivianne Rodrigues, Tricia
Wright, Aiko Hayashi, Shinichi Saoshiro; Editing by Dan
Grebler)
