GLOBAL MARKETS-Equities rally on US data, yen weakens

Thu Jan 17, 2013 2:11pm EST

* U.S. data points to strengthening economy
    * S&P 500 hits highest level in five years
    * Dollar jumps against Japanese yen, euro at session high
    * Crude prices rise on violence in Algeria, Mali


    By Ryan Vlastelica
    NEW YORK, Jan 17 (Reuters) - Global equity markets rallied
on Thursday while the dollar pared losses against the euro as
surprisingly strong U.S. housing and labor market data signaled
strength in the world's largest economy. 
    Strong demand at a Spanish debt auction added to bullish
sentiment on riskier assets, while crude oil prices climbed.
    The S&P 500 hit levels not seen since late December 2007 as
reports showed new claims for U.S. unemployment benefits tumbled
to a five-year low last week and housing starts surged last
month. 
    "The unemployment claims were nice, the housing starts were
nice, so that is positive for us. There are some good positive
vibes out there," said Harry Clark, chief executive of Clark
Capital Management Group in Philadelphia.
    The Dow Jones industrial average was up 112.55
points, or 0.83 percent, at 13,623.78. The Standard & Poor's 500
Index was up 11.58 points, or 0.79 percent, at 1,484.21.
The Nasdaq Composite Index was up 25.95 points, or 0.83
percent, at 3,143.49.
    World stock markets, which have largely
drifted sideways this week, rose 0.6 percent and were on track
to hit a 20-month high. European shares closed 0.5
percent higher.
    In Europe, the main focus was on Spain's success in selling
4.5 billion euros ($6 billion) of new bonds at a lower cost than
in the previous auction, signaling growing confidence among
investors in the outlook for the recession-hit euro area.
    Spanish 10-year yields edged higher on the day
at 5.078 percent but were down from a session high of 5.174.
Equivalent Italian yields were near session lows
at 4.183 percent.
    The benchmark 10-year U.S. Treasury note was
down 20/32, with the yield at 1.8874 percent. 
    The U.S. dollar extended gains versus the yen and pared
losses versus the euro after the strong U.S. data.
    The greenback last traded at 89.83 yen, jumping 1.6
percent on the day. The dollar fell 0.7 percent versus the euro
at $1.3378 a level that represented a session high for
the euro.
    The euro and the dollar were already higher against the yen
after Japanese Economy Minister Akira Amari was quoted as saying
his recent comments on the negative impact of a weak yen had
been misinterpreted.
    The yen has been falling ahead of a Bank of Japan meeting
next week at which policymakers are widely expected to adopt a 2
percent inflation target and perhaps extend the current asset
purchase program.
    Oil prices gained support from the signs of economic
strength, which imply strong future demand for oil. They were
also lifted by concerns that supplies could be affected by
military activity in Algeria and Mali. 
    Brent added 1.2 percent to $110.99 a barrel, and
U.S. oil was up 1.4 percent to $95.53.
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