* U.S., European shares rise as government bonds fall
* Oil settles lower after rising above $50 a barrel
* Dollar climbs for third day versus major currencies
By Vivianne Rodrigues
NEW YORK, Jan 6 (Reuters) - Stocks climbed across the globe
on Tuesday, extending last week's advance, as investors bet
economic stimulus packages would spur economic recovery, while
demand concerns pulled oil off of levels above $50 a barrel.
Technology shares led gainers on Wall Street, with the S&P
Information Technology index <.GSPT>, rising about 3 percent,
and the U.S. dollar extended a three-day rally against most
major currencies, particularly the euro.
U.S. Treasuries erased losses to trade little changed after
stocks came off session highs, and New York crude futures
settled lower as demand concerns and profit-taking halted a
rally.
Investors looked past weak U.S. economic data and focused
on President-elect Barack Obama's stimulus plan, which has
helped fuel a tentative recovery in world equity markets.
"Bad news has already been priced in by the market, while
good news hasn't. All the stimulus plans and aggressive
interest rate cuts are just starting to have an impact on
equities," said Marc Touati, chief economist at Global Equities
in Paris.
Obama's plan may include $310 billion in tax cuts as part
of a $775 billion package. German officials have also debated
tax cuts to revive Europe's largest economy.
Stock investors shrugged off a warning in minutes of a
meeting of Federal Reserve policy-makers on Dec. 15-16 of
uncomfortably low levels of inflation and that the economic
outlook will be weak for some time.
Further signs of a dismal economy increase "the probability
that the stimulus package will not just be passed, but
ultimately be deployed in the size the new president wants,"
said Craig Peckham, equity trading strategist at Jefferies & Co
in New York.
The Dow Jones industrial average <> closed up 62.21
points, or 0.69 percent, at 9,015.10. The Standard & Poor's 500
Index <.SPX> rose 7.25 points, or 0.78 percent, at 934.70. The
Nasdaq Composite Index <> added 24.35 points, or 1.5
percent, at 1,652.38.
The pan-European FTSEurofirst 300 index <> of top
European shares closed up 1.9 percent at 889.57, and has now
gained about 18 percent since hitting a low in late November.
In Japan, the Nikkei 225 <> closed up 0.4 percent and
the MSCI index <.MIAPJ0000US> of Asia-Pacific stocks outside
Japan edged up for a seventh straight day, rising 0.7 percent.
The dollar rose to a three-week high against the euro,
helped by persistent signs of economic weakness in the euro
zone, which may force its central bank to slash interest rates
further.
In late New York trading, the euro <EUR=> eased 0.6 percent
to $1.3519, having fallen as low as $1.3311, its weakest since
Dec. 12, according to Reuters data.
"Obviously, economic data in the euro zone is just as
terrible as it is in the U.S., but U.S. officials have been
very proactive, actually the most proactive in combating the
recession," said Matt Esteve, a foreign exchange trader at
Tempus Consulting in Washington.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.35 percent at 82.869. Against
the yen, the dollar <JPY=> rose 0.47 percent to 93.81.
U.S. Treasury debt prices traded lower as concerns about
the pending massive supply of government debt to pay for
Obama's proposed stimulus plan pushed yields to three-week
highs.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
5/32 in price to yield at 2.49 percent. The 30-year U.S.
Treasury bond <US30YT=RR> fell 25/32 in price to yield at 3.06
percent.
Oil fell below $49 a barrel as weak U.S. economic data
triggered profit-taking, outweighing concerns about rising
geopolitical tensions and production cuts by the Organization
of Petroleum Exporting Countries that threaten tighter
supplies.
U.S. crude <CLc1> for February delivery fell 23 cents to
settle at $48.58 a barrel after touching a high of $50.47
earlier in the day. London Brent <LCOc1> settled up 91 cents at
$50.53 a barrel.
Dealers said a fresh batch of gloomy economic data from the
United States would make it tough for crude prices to make a
sustained push through $50 a barrel.
Gold finished higher, rebounding from a two-week low early
in the day.
U.S. gold futures for February delivery <GCG9> settled up
$8.20 to $866.00 an ounce in New York.
(Additional reporting by Rebekah Kebede, Nick Olivari,
Vivianne Rodrigues and Pedro Nicolaci da Costa in New York;
writing by Herbert Lash)
