GLOBAL MARKETS-U.S. stocks rally on China data; bonds up on Syria fears

Mon Sep 9, 2013 4:14pm EDT

* Wall St jumps 1 pct; Nasdaq ends at highest in 13 years
    * China exports ease worries about sharp slowdown
    * Soft U.S. jobs data boosts speculation over Fed tapering
    * 2020 Olympics win boosts Tokyo stocks
    * Oil slips as U.S. seeks support for Syrian strike

    By Ellen Freilich
    NEW YORK, Sept 9 (Reuters) - U.S. stocks rallied on Monday
as upbeat economic data from China spurred the S&P 500 higher
for a fifth straight day, while bonds rallied and oil prices
fell on diverging outlooks on the possibility of a Western
strike against Syria.
    The dollar fell against most major currencies as debate
persisted over when, and by how much, the U.S. Federal Reserve
would begin to reduce its bond-buying program. Most economists
think the Fed will announce a cut in bond purchases when it
meets next week, a Reuters poll showed on Monday.
 
    The White House continued to work on persuading Congress to
approve a military strike to punish Syrian President Bashar
al-Assad, with oil prices falling on perceptions that there was
less chance of an imminent strike. But lingering worries that
there will be U.S. military action drove a safety bid for U.S.
Treasuries.
    Benchmark 10-year notes were last up 10/32 in
price. Their yields eased from two-year highs to 2.91 percent,
down from 2.94 percent on Friday.
    U.S. stocks rallied after upbeat Chinese export data
lessened concern about a sharp slowdown in China, the world's
second biggest economy. The Nasdaq ended at its highest level
since September 2000.
    "Even if you are skeptical of Chinese data, this fits a
pattern of global demand turning the corner, inching higher,"
said Quincy Krosby, market strategist at Prudential Financial in
Newark, New Jersey.
    The Dow Jones industrial average rose 140.31 points
or 0.94 percent, to 15,062.81, the S&P 500 gained 16.51
points or 1 percent, to 1,671.68 and the Nasdaq Composite
 added 46.173 points or 1.26 percent, to 3,706.183.
    "There's good news from developed economies and U.S.
fundamentals are good," said Doug Cote, chief market strategist
at ING Investment Management in New York, with $190 billion in
assets under management. "U.S. companies delivered
year-over-year earnings growth in the second quarter while
establishing a new record for quarterly earnings per share."
    The upswing in Chinese exports lifted other world equity
markets as well.
    The MSCI emerging equities index rose 1.8 percent
to a three-week high. It has rallied about 4 percent in the last
four trading sessions, helped by the stronger Chinese data.
    The MSCI world equity index gained 1.99
percent for a sixth successive daily rise.
    European shares, however, slid as disruptions to business in
the Middle East hurt oil firm BG Group and the threat of
a spike in crude prices fueled profit-taking on construction
firm Bouygues.
    The broad FTSE Eurofirst 300 index was 0.15 percent
lower, though it is still up 6.4 percent since the start of
July, more than twice as much as the U.S. S&P 500. 
    The dollar slipped against most major currencies on Monday
amid the continued debate over how soon the Fed would taper its
stimulus program following the disappointing U.S. jobs report
for August last week.
    But the dollar rose against the yen, which lost ground as
Japanese stocks rallied after Tokyo won its bid to host the 2020
Olympics and got an upgrade of second-quarter economic growth.
    Better-than-expected euro zone sentiment data lifted the
euro. The euro rose 0.61 percent against the dollar,
while the dollar gained 0.48 percent against the yen. The
dollar index was down 0.44 percent on Monday, extending Friday's
0.6 percent drop.
    Expectations the Fed would announce a tapering of its
monthly bond purchases at its Sept. 17-18 policy meeting have
buoyed the dollar lately and are still largely responsible for
the 2.8 percent gain in the dollar index this year. A reduction
in stimulus will lift U.S. Treasury yields and bolster the
appeal of dollar-denominated assets.
    While the euro was supported by the positive Sentix
sentiment data, investors kept a wary eye on Rome, where the
Italian Senate will debate whether to expel former premier
Silvio Berlusconi from parliament. Such an expulsion could
threaten the country's ruling coalition.
    The dollar rose against the yen. The Olympics win for Tokyo
could boost the Japanese economy and contribute to Prime
Minister Shinzo Abe's efforts to inflate the economy after
decades of sub-par growth and deflation. The Tokyo bid committee
estimated hosting the Olympics could boost the economy by 3
trillion yen ($30 billion) over the next seven years.
    The news sent the Nikkei, to a five-week high while
the yen, which has an inverse correlation with Tokyo shares,
slipped. The yen is a safe-haven currency and tends to move in
the opposite direction to riskier assets like stocks. Japanese
stocks were also helped by a sharp upward revision of
second-quarter growth data. 
    The dollar hit a high of 100.10 yen earlier on Monday. The
euro rose 1.1 percent to 132.06 yen.
    Both the dollar and the euro have gained more than 14
percent this year against the yen as the Bank of Japan embarked
on a massive monetary stimulus program in April.
    "The Olympics bid has added a bit more to the underlying
negative yen trend," said Paul Robson, currency strategist at
RBS Global Banking.
    Meanwhile, the Australian dollar hit a three-week high at
$0.9233, benefiting from the Chinese trade data. China is
Australia's biggest export market. The Aussie last stood at
$0.9232, up 0.53 percent. It barely reacted to Saturday's
national election result.
    China publishes industrial production and retail sales
numbers on Tuesday, which should add to signs the economy is on
track to hit its target of 7.5 percent growth this year.
    Oil markets looked past the Chinese data to focus on Syria.
Russia and China again urged the United States to avoid military
action ahead of a key vote by the U.S. Senate. 
    The global Brent crude benchmark fell $3 to $113.12.
U.S. oil lost $1.62 cents to $108.91. 
    The U.S. Treasury will sell $65 billion in new three-year,
10-year and 30-year bonds this week.