Saturday, April 16, 2011

GLOBAL MARKETS-Stocks, oil gain on better-than-expected data

NEW YORK: Global stocks and crude oil rose on Friday, April 15 as better-than-expected economic reports and improving U.S. consumer confidence eased concerns about rising fuel costs even as gold hit a record high on inflation fears.

U.S. Treasury debt gained after government data showed underlying U.S. inflation pressures remained subdued and a survey said consumers were more restrained in their long-term inflation outlook.

Core consumer prices, which exclude volatile food and energy costs, edged up a less-than-expected 0.1 percent in March while consumer inflation expectations for the next five to 10 years fell, boding well for fixed-income prices.

But gold prices rose 1 percent to a record as a rally in crude oil and a downgrade of Ireland's sovereign debt powered bullion toward its fifth consecutive weekly gain.

Spot gold hit a record $1,487.90 an ounce but remained far below its all-time inflation-adjusted high of almost $2,500 an ounce in 1980.

Wall Street rallied but the market is set to climb a wall of worry next week when more than one-fifth of S&P 500 companies report results. Disappointing results from Bank of America and Google late Thursday kept gains in check.

"I'm surprised the market is holding up so well, given Google and Bank of America. But everyone is happy with the consumer price number," said Randall Warren, chief investment officer of Warren Financial Service in Exton, Pennsylvania.

"People were afraid that inflation could derail the bull market, and this data puts that story on hold."

Other data showed industrial capacity use jumped in March to its highest level since August 2008 while manufacturing activity in New York state was better than expected, easing worries about slower growth.

The Dow Jones industrial average <.DJI> closed up 56.68 points, or 0.46 percent, at 12,341.83. The Standard & Poor's 500 Index <.SPX> gained 5.16 points, or 0.39 percent, at 1,319.68. The Nasdaq Composite Index <.IXIC> added 4.43 points, or 0.16 percent, at 2,764.65.

European stocks ended slightly higher but posted their first weekly loss in a month on worries over the euro zone debt crisis after Moody's cut Ireland's sovereign credit rating to just above "junk" status. [ID:nLDE73E1L1]

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.3 percent higher at 1,131.72 points. For the week, it posted a 1.5 percent loss.

Global stocks as measured by MSCI's all-country world index <.MIWD00000PUS> rose 0.1 percent, pulled higher by Wall Street.

The Moody's downgrade kept Europe's debt problems in focus although the euro was underpinned by expectations of more rate rises by the European Central Bank and the likelihood that the Federal Reserve will keep U.S. rates on hold. [ID:nN15420019]

"The interest rate differential argument has clearly supported the euro the last few weeks," said Greg Salvaggio, senior vice president for capital markets at Tempus Consulting in Washington.

Brent crude surged past $123 a barrel and prices in New York settled almost at $110 a barrel. Concerns about the impact of surging fuel on the economic recovery and consumption hit prices earlier in the week, knocking Brent off 32-month highs.

U.S. crude futures rose $1.55 to settle at $109.66 a barrel, marking the third straight day of gains. ICE Brent crude for June, the new front-month contract, settled up $1.45 to $123.45 a barrel in London.

The euro was down 0.4 percent at $1.4432, while the dollar was down 0.5 percent at 83.12 yen .

U.S. Treasuries extended gains.

The benchmark 10-year U.S. Treasury note was up 22/32 in price to yield 3.41 percent.

Analysts and traders are turning increasingly bullish on the near term outlook for U.S. Treasuries, saying slowing growth and benign inflation may help further price gains.

Copper closed almost flat as the dollar pared gains, but investors worried high inflation in China would lead to monetary tightening and erode demand.

"The pace of Chinese growth points to further monetary tightening there, which could weigh on Chinese fuel demand in the future," said Carsten Fritsch, an analyst at Commerzbank. - Reuters

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