* Market talk that China’s GDP will top forecasts
* Euro hits one-week high against dollar
* Oil prices rise, bonds retreat after stocks rally
By Herbert Lash
NEW YORK, April 12 (Reuters) – Global stocks surged and the
euro rose on Thursday after stronger-than-expected demand at an
Italian bond auction eased worries about the euro zone debt
crisis and talk that economic growth in China may top forecasts
stoked risk appetite.
Oil prices also rose on the talk about Chinese growth and as
the weaker dollar spurred buying of riskier assets.
Shares in both the United States and Europe rose more than 1
percent. Traders cited talk that China on Friday may report data
that will top forecasts for first-quarter growth of 8.3 percent.
One trader said there was talk that growth could come in at 9
percent.
The euro rose to a one-week high against the dollar as the
Italian and Spanish benchmark bond yields dipped. Debt-plagued
Italy and Spain are at the center of concerns that the euro zone
debt crisis is still not contained.
“The easing bond yields are a signal to investors here that
things aren’t quite that bad in Europe,” said Brian Gendreau,
market strategist with Cetera Financial Group.
The Dow Jones industrial average was up 167.22 points,
or 1.30 percent, at 12,972.61. The Standard & Poor’s 500 Index
was up 17.36 points, or 1.27 percent, at 1,386.06. The
Nasdaq Composite Index was up 38.54 points, or 1.28
percent, at 3,055.
In Europe, mining shares led gains on the speculation on
China, while in New York basic materials shares were top
performers as the euro gained against the dollar and commodities
prices advanced.
“Basic materials and industrials could be up on bets the
Chinese GDP report tonight might be better than expected,” said
Jim Paulsen, chief investment officer of Wells Capital
Management in Minneapolis.
Shares of Hong Kong and Shanghai rose overnight on optimism
about easier monetary policy in China and a better-than-expected
economic outlook.
Paulsen also noted that quarterly earnings reported so far
“have already show a pretty good beat rate,” adding, “I wonder
if we’re going to beat the low hurdle of earnings.”
Markets shrugged off U.S. data that first-time claims for
jobless aid rose unexpectedly in the latest week. Some
economists blamed the Easter holiday for the spike in claims and
expected applications to trend lower in coming weeks.
Other data showed that the U.S. trade deficit shrank 12.4
percent to $46 billion in February, the biggest month-to-month
decline since May 2009, the Commerce Department said, as exports
hit a record high.
The export data bolstered optimism over the outlook for
corporate earnings and could economists to raise their estimates
for first-quarter U.S. gross domestic product and boost growth
in the second quarter.
“There was a big improvement in the real trade deficit, so I
think it’s reasonable to expect a modest tailwind to growth in
Q2 coming from the trade data, as opposed to a modest headwind.
I think this puts GDP at 2 percent or higher,” said Eric Green,
chief economist at TD Securities in New York.
The S&P; materials sector rose 2.8 percent, while the
energy sector gained 2.0 percent, stoked by
European shares hit a one-week closing high, with the
FTSEurofirst 300 index of top European shares up 1.1
percent at 1,044.19 points.
U.S. Treasury debt prices eased on Thursday as stock market
strength eroded the safe-haven allure of U.S. government debt,
U.S. government debt prices pared gains to trade at
break-even or lower. The benchmark 10-year U.S. Treasury note
was down 7/32 in price to yield 2.06 percent.
Italy’s debt rallied for a second day running, with yields
on its 10-year bonds falling 13 basis points to
trade at 5.40 percent.
Appetite for higher-yielding debt cooled demand for
low-risk Bund futures which fell 19 ticks to 139.63.
The euro rose to a one-week high of $1.3186 and last
traded at $1.3177, up 0.5 percent on the day.
The euro hit a high of 106.72 and last traded at
106.64, up 0.6 percent on the day, according to Reuters data.
Oil rose for a second straight day as a weaker dollar
triggered buying of riskier assets.
ICE Brent futures added $1.10 to $121.28 a barrel.
U.S. crude oil was up $1.02 at $103.72.
