GLOBAL MARKETS-Shares, dollar gain after GDP data eases Fed fears
* European shares, bonds rebound for second day * U.S. 1st-quarter final growth estimate cut to 1.8 pct * Dovish comments from ECB's Draghi weigh on euro * Oil prices slide, bond prices gain By Herbert Lash NEW YORK, June 26 (Reuters) - The dollar rose and global equity markets gained for a second day in a row on Wednesday after a surprisingly sharp downward revision to first-quarter U.S. economic growth eased concerns that the Federal Reserve may soon begin to withdraw stimulus. In addition, moves by China to calm bank fears and supportive signs from the European Central Bank on the need for continued stimulus helped extend Tuesday's rebound after the global sell-off last week of stocks, commodities and bonds. U.S. gross domestic product grew at only a 1.8 percent annual rate in the first quarter, the Commerce Department said in its final estimate, down from the prior estimate of a 2.4 percent pace. "Despite all the rhetoric and fear about tapering, this will keep the Fed firmly planted in stimulus, which is a positive for the market," Michael Mullaney, chief investment officer at Fiduciary Trust Co in Boston, which oversees more than $9.5 billion, said. "This is another example of bad news being good news," he said. The S&P 500 was on track for its biggest two-day gain in three weeks, while European stocks gained close to 2 percent after the ECB's president, Mario Draghi, said an accommodative monetary policy was still appropriate. The bank's policy, he said, "will stay accommodative for the foreseeable future." MSCI's all-country world equity index rose 0.79 percent, while the pan-European FTSEurofirst 300 index of leading regional companies gained 1.68 percent to close at a provisional 1,149.33 points. The EuroSTOXX 50 index rose 2.4 percent. The Dow Jones industrial average was up 89.49 points, or 0.61 percent, at 14,849.80. The Standard & Poor's 500 Index was up 9.68 points, or 0.61 percent, at 1,597.71. The Nasdaq Composite Index was up 21.71 points, or 0.65 percent, at 3,369.60. The S&P 500 advance followed a gain of nearly 1 percent on Tuesday, which came as U.S. data on durable goods orders, sales of new homes and consumer confidence all topped expectations. A pledge by China's central bank, the People's Bank of China, to act as a lender of last resort was the real story of the day, said Fred Dickson, chief market strategist at The Davidson Cos. in Lake Oswego, Oregon. "The global fears regarding the possibility of a Chinese credit situation spilling over and becoming very serious has eased off some," Dickson said. The People's Bank "is going to come in and make sure the Chinese banking system doesn't collapse." Gold hit its lowest level in almost three years and was on course for a record quarterly loss. Prices could slide to levels below $1,000 per ounce, investors and analysts said. Bond markets in Europe and benchmark U.S. Treasuries also continued to claw back ground, although investors remained worried that the rebound could give way with markets likely to need more time to acclimatize to the new environment. The benchmark 10-year U.S. Treasury note was up 15/32 in price to yield 2.554 percent. "Having seen an incredibly violent sell-off in the Treasury markets that took everything with it, there is a certain amount of settling back going on," said Kit Juckes, a market strategist at Societe Generale in London. Brent crude for August delivery fell 46 cents at $100.80 a barrel. U.S. crude fell 62 cents to $94.70 a barrel. The euro was down 0.61 percent at $1.3004, stung by Draghi's comments on an accommodative monetary policy and the risks to growth in the euro zone. "Juxtaposed against shifting Fed policy, (Draghi's comments) highlights that relative central bank policy will soon shift from supporting to weighing on the euro," Camilla Sutton, chief FX strategist at Scotiabank, said. The dollar rose to a three-week high of 83.003 against a basket of currencies, buoyed mainly by solid gains against the euro. It later traded at 82.908.
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