GLOBAL MARKETS-Wall St hits 5-year high on data; yen falls again

Fri Jan 4, 2013 5:20pm EST

* S&P 500 closes at highest in five years
    * Treasury yields hit highest since April before edging down
    * Gold bounces from lowest since August, still off


    By Rodrigo Campos
    NEW YORK, Jan 4 (Reuters) - World shares rose on Friday and
the S&P 500 index marked its highest close in five years after
data on the services sector and labor market data signaled the
U.S. economy continues its steady but slow recovery, while the
yen hit a 2-1/2-year low against the dollar.
    Yields on 10-year U.S. notes slipped after touching an
eight-month high earlier in the session. The notes had sold off
sharply on Thursday after the release of Federal Reserve meeting
minutes that hinted at growing unease within the Fed about asset
purchases.
    The benchmark S&P 500 gained almost a half a percent
to notch its highest closing level since Dec. 31, 2007, after
data showed the U.S. services sector grew in December at its
fastest clip in 10 months. Stocks had surged earlier in the week
following a budget deal in Washington. 
    European equities rose, partly on signs that Europe may be
through the worst of its economic slump, while growth in the
world's private sector businesses hit a nine-month high at the
end of last year according to a JPMorgan gauge. 
    "The economy is recovering at the hands of Fed policy, and
it is getting restored to a point of critical mass where the Fed
will eventually remove itself," said Andrew Wilkinson, chief
economic strategist at Miller Tabak & Co in New York.
    The S&P 500 gained 7.10 points, or 0.49 percent, to close at
1,466.47. The Dow Jones industrial average gained 43.85
points, or 0.33 percent, to 13,435.21, and the Nasdaq Composite
Index gained 1.09 points, or 0.04 percent, to 3,101.66. 
    A 2.8 percent decline in Apple shares cut into
gains on the Nasdaq.
    An MSCI index of global shares posted its
best week in six, and its sixth week of gains in the last seven.
A pan-European equities gauge rose 0.4 percent to close
at its highest level since Feb. 28, 2011.
    On Thursday the Fed minutes disturbed the bond market, with
Fed officials seen as being more concerned about the potential
risks of the U.S. central bank's asset purchases on financial
markets, even as they continue an open-ended stimulus program
for now.
    "We could see the central bank tapering off its bond buying
across 2013, but do not see it walking away from low interest
rates quickly," Miller Tabak's Wilkinson said.
    Most economists at Wall Street's top financial institutions
expect the Fed to stop buying Treasury debt sometime in 2013,
according to a Reuters poll. 
    The 10-year U.S. Treasury note was last up 2/32, with the
yield down for the day at 1.9026 percent. Yields earlier hit an
eight-month high of 1.9755 percent.
    
    YEN SLIDE CONTINUES
    The dollar rose to a near 2-1/2-year high against the yen on
speculation of more monetary easing in Japan.
    "The reason that the dollar is holding up better against the
yen than anywhere else is because the main focus is on the
Japanese monetary policy rather than the U.S. monetary policy,"
said Vassili Serebriakov, FX Strategist at BNP Paribas in New
York.
    The yen posted its eighth consecutive week of declines
against the greenback.
    Tentative signs that the euro zone economy may have passed
the worst of its downturn also supported risk assets. 
    Markit's Eurozone Composite PMI, which gauges business
activity across thousands of the region's companies, rose in
December to 47.2, from 46.5 in November - below the 50 line that
divides growth from contraction but at its highest level since
March. 
    Brent crude shed 0.6 percent to $111.45 a barrel
while U.S. crude edged up 0.2 percent to $93.10.
    Spot gold pared losses that took it to its lowest
since August, but was still slightly down on the day at
$1,656.85 an ounce.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article