Reuters: US Dollar Report: GLOBAL MARKETS-Stocks rally on U.S. data, dollar rebounds

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GLOBAL MARKETS-Stocks rally on U.S. data, dollar rebounds May 1st 2012, 18:18 Tue May 1, 2012 2:18pm EDT * U.S. factory growth best in 10 months * World shares higher but May Day holiday keeps trading thin * U.S. dollar rebounds from lows versus euro, yen By Wanfeng Zhou NEW YORK, May 1 (Reuters) - U.S. stocks and the dollar rallied on Tuesday after data showed U.S. manufacturing grew in April at the strongest pace in 10 months, soothing recent worries about the economy. Safe-haven Treasuries prices fell, while gold retreated from two-week highs as the data dampened speculation the Federal Reserve would adopt fresh monetary easing measures to boost growth. The S&P 500 index soared 1 percent and the Dow Jones industrial average hit its highest level since December 2007 after the Institute for Supply Management said its index of national factory activity rose to 54.8 from 53.4 in March, exceeding expectations of 53.0. "The view on the economy has swung from optimism to pessimism of late and this could bring us back to the middle," said Nick Bennenbroek, head of FX strategy for North America at Wells Fargo in New York. "ISM suggests there's no real reason to get too concerned about the path of the U.S. economy at this point." The Dow Jones industrial average was up 107.28 points, or 0.81 percent, at 13,320.91. The Standard & Poor's 500 Index was up 13.99 points, or 1.00 percent, at 1,411.90. The Nasdaq Composite Index was up 22.99 points, or 0.75 percent, at 3,069.35. The MSCI world equity index gained 0.4 percent to 330.05. Trading was limited with many markets in Asia and Europe closed for the May Day holiday. World stocks posted a loss of about 1.5 percent last month as worries about global growth resurfaced after data showed the U.S. economy cooled in the first quarter and the euro zone recession was deepening. The weakness has also spread to other countries as the British manufacturing sector barely grew in April, hit by the economic slowdown in the euro zone, while Canada said its economy unexpectedly shrank in February. Adding to bullish sentiment were signs of recovery in Chinese manufacturing. China's Purchasing Managers' Index rose to a 13-month high in April, suggesting the world's second-largest economy has found a footing and may be recovering from a first-quarter trough. AUSSIE TUMBLES The Australian dollar fell nearly 1 percent against its U.S. counterpart after the Reserve Bank of Australia slashed rates by a deeper-than-expected 50 basis points. Domestic government bond yields hit 60-year lows. The dollar rose 0.5 percent to 80.21 yen, rebounding from a low of 79.62, its weakest since February. The stronger yen hit Japan's export-related equities, sending the Nikkei index down 1.8 percent to a 2-1/2-month closing low. The euro slipped 0.2 percent to $1.3220, off an earlier one-month high of $1.3283. Light volumes were expected before Thursday's European Central Bank meeting, Friday's U.S. nonfarm payrolls report and weekend elections in Greece and France. Brent crude rose 36 cents to $119.85 a barrel while U.S. crude rallied $1.32 to $106.19. Gold inched up to a two-week high and last traded around $1,661 an ounce. The benchmark 10-year U.S. Treasury note was down 11/32, with the yield at 1.9558 percent. Benchmark yields, however, are still hovering at their lowest levels in nearly three months. Link this Share this Digg this Email Reprints

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