GLOBAL MARKETS-Stocks, dlr buoyed by U.S. retail sales data

                                

                                
 * U.S. retail sales data boosts global stocks
                                
 * Euro drops from three-week high
                                
 * Investors speculate on Fed meeting outcome
  (Updates with U.S. market open)
                                
 By Al Yoon and Alina Selyukh
                                
 NEW YORK, Dec 14 (Reuters) - World stocks rose, nearing a
two-year high set in November, and the dollar rebounded after
stronger-than-expected U.S. consumer spending boosted optimism
of a lasting global economic recovery.
                                
 U.S. benchmark Treasury yields jumped to their highest
levels in more than six months after U.S. retail sales rose for
a fifth straight month.
                                
 The U.S. producer price index also increased more than
anticipated, further evidence to suggest economic growth was
accelerating. For details, see [ID:nN14261708]
                                
 European shares pared losses after the U.S. data, which
affirmed a stocks rally that has pushed up the S&P 500 index by
6 percent since Nov. 29. Investors also expected the U.S.
compromise U.S. plan that includes an extension of tax cuts and
jobless benefits and a payroll tax credit, to boost the
economy.
                                
 "The hand-off to 2011 looks very promising," Tom Porcelli,
chief U.S. economist at RBC Capital Markets, said. "Very solid
... there is no other way to describe the retails sales
report."
                                
 The rise in retail sales showed that consumers are ramping
up spending in the thick of the critical holiday shopping
season, said Jim Baird, partner and chief investment strategist
at Michigan-based Plante Moran Financial Advisors.
                                
 Investors also awaited a meeting of the U.S. Federal
Reserve, with policymakers expected to assess the central
bank's $600 billion bond-buying program but not signal any
shift in its monetary easing program.
                                
 The Dow Jones industrial average <.DJI> rose 54.57 points,
or 0.48 percent, to 11,483.13. The Standard & Poor's 500 Index
<.SPX> climbed 4.19 points, or 0.34 percent, to 1,244.65 and
the Nasdaq Composite Index <.IXIC> gained 10.66 points, or 0.41
percent, to 2,635.57.
                                
 Consumer electronics retailer Best Buy Inc <BBY.N> reported
a decline in quarterly profit and sales, pushing its shares
down 14.7 percent. The company also cut its full-year outlook,
citing weak demand in its key U.S. market. [ID:nN13207737]
                                
 The MSCI world equity index <.MIWD00000PUS> and the Thomson
Reuters global stock index <.TRXFLDGLPU> both rose about a
one-third of a percent. The MSCI index is just below a two-year
high set in November.
                                
 China's extension of special reserve requirements for top
banks also supported world stocks and commodities as
expectations rose that Beijing was unlikely to aggressively
cool down its economy, with the rest of the world relying on
China's robust growth. [ID:nLDE6BC0ET]
                                
 Chinese stocks rose 0.1 percent <.SSEC>. A leading official
newspaper reported China will probably target a limit of about
7.5 trillion yuan ($1.1 trillion) in new loans next year, an
indication that policy could be slightly looser than expected.
                                
 In Europe, the FTSEurofirst 300 index <.FTEU3> rose 0.2
percent near its close of trading. Emerging stocks <.MSCIEF>
added 0.6 percent.
                                
 Treasuries dropped, adding to a sharp selloff since the tax
deal between U.S. President Barack Obama and Republican
lawmakers sparked concerns over a widening federal budget gap
and the inflationary impact of faster growth.
                                
 "A more robust U.S. growth outlook has taken over the
mantle of market leadership," Goldman Sachs wrote to clients.
                                
 U.S. Treasury 10-year note yields, which influence consumer
and corporate borrowing costs, rose 0.08 percentage point to
3.36 percent.
                                
 The euro gave up gains against the dollar as U.S. bond
yields edged higher and investors squared positions ahead of
the Fed's final meeting for 2010. The euro earlier hit a
three-week high against the dollar.
                                
 The dollar gained 0.21 percent against a basket of major
trading-partner currencies. The euro <EUR=> fell 0.07 percent
to $1.3380. Against the Japanese yen, the dollar <JPY=> rose
0.19 percent to 83.56 yen.
                                
 In commodities, U.S. light sweet crude oil <CLc1> fell 46
cents, or 0.52 percent, to $88.15 per barrel. Gold <XAU=> rose
$3.00, or 0.22 percent, to $1396.10.
  (Additional reporting by Natsuko Waki in London, and Angela
Moon in New York; editing by Jeffrey Benkoe)