NEW YORK (Reuters) - Stocks around the world rose on Tuesday, helped by positive Chinese economic data that supported expectations of better corporate earnings, while the yen snapped a three-day decline against the U.S. dollar.
The Dow Jones industrial average closed at a record high after investors took the morning's modest decline as an opportunity to buy.
A report showing benign Chinese inflation raised hopes for a more accommodative monetary policy from China and also gave a lift to commodities, including copper and oil.
China's annual consumer inflation cooled in March as food prices eased from nine-month highs and producer price deflation deepened, data showed, leaving policymakers room to keep monetary conditions easy and nurture a nascent recovery.
That made stocks the key focus in financial markets as the yen struggled late in the global trading day after earlier reversing its recent decline against both the dollar and euro.
The Dow Jones industrial average .DJI gained 59.98 points, or 0.41 percent, at 14,673.46. The Standard & Poor's 500 Index .SPX was up 5.54 points, or 0.35 percent, at 1,568.61. The Nasdaq Composite Index .IXIC was up 15.61 points, or 0.48 percent, at 3,237.86.
A significant driver of the U.S. stock rally has been extraordinary stimulus measures from the Federal Reserve, and investors will be looking at company forecasts to gauge whether the fundamentals are strong enough to keep stocks climbing higher.
The day's top sectors, technology and energy, are groups that are closely tied to the pace of economic growth.
Among blue-chip technology stocks, Microsoft Corp (MSFT.O) jumped 3.6 percent to $29.61 as the Dow's top percentage gainer. Intel Corp (INTC.O) shares shot up 3.1 percent to $21.75.
Energy shares .SPNY rose 0.8 percent, climbing with a 0.9 percent rise in the price of crude oil.
"It's encouraging that we're seeing cyclical sectors lead the rally. It's a healthy sign - investors believe the market can continue to run higher," said Joseph Tanious, global market strategist at J.P. Morgan Funds in New York.
Europe's FTSE Eurofirst 300 index .FTEU3 finished up just 0.05 percent.
But MSCI's world equity index .MIWD00000PUS, which tracks share prices in 45 countries, was up 0.6 percent.
The yen remained the central trade in currency markets.
The Japanese currency weakened to 99.66 to the dollar, according to Reuters data. That was the greenback's strongest level against the yen since May 2009, before the sell-off in the yen stalled and sent the dollar back to 98.58 yen.
Even as it happened, analysts were suggesting the yen's advance would be temporary before the Japanese unit would again weaken and the dollar would sail past the 100-yen mark.
"Given the breadth of yen bearishness, any reprieve would likely encourage investors to re-establish short yen positions at more favorable exchange rates," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C.
Late in the New York session, the Japanese currency was down 0.4 percent at 99 yen. <FRX/>
The U.S. currency has still gained around 7 percent against the yen since the Bank of Japan unveiled a massive stimulus program last Thursday involving large purchases of long-term Japanese government bonds.
The BOJ's bold measures have had a major impact on the world's main debt markets, sending Japanese government yields down sharply and spurring a search for higher-yielding assets, which has caused yields to fall on U.S. and euro zone bonds.
"Markets are increasingly focused on the notion that larger JGB purchases, at longer maturities, by the BOJ could push Japanese domestic long-term investors elsewhere," said Vassili Serebriakov, strategist at BNP Paribas in London.
However, yields on highly rated euro zone bonds moved up from record lows as investors began to position for fresh government debt auctions.
German 10-year bond yields were higher at 1.276 percent, having hit 1.2 percent on Friday, their lowest level since mid-2012 before European Central Bank President Mario Draghi promised to do whatever it took to save the euro. The euro rose against the yen for a fourth day, at one point, climbing to its highest since January 2010.
Prices for longer-dated U.S. Treasuries slid on Tuesday as investors extended a sell-off after last week's rally and before debt auctions later in the week. Benchmark 10-year Treasury note yields were at 1.75 percent.
The Chinese data underpinned demand for copper, which climbed to a two-week high of $7,645.25 a metric ton (1.1023 tons) on the London Metal Exchange before paring slightly to trade at $7,630 a metric ton, up 2.4 percent.
Crude oil also gained on the Chinese data, and a stalemate in talks between Iran and Western nations over its nuclear program and rising tensions on the Korean peninsula also supported prices.
Brent rose 1.7 percent to $106.41. U.S. oil futures rose 0.8 percent to $94.12 a barrel and <O/R>
(Reporting by Nick Olivari; Editing by Dan Grebler and Kenneth Barry)