GLOBAL MARKETS-Euro, stocks lifted by manufacturing data in U.S., Europe
* German data helps European shares bounce off 2-month lows * Wall Street shares rise on U.S. manufacturing data * Investors still unsure whether Fed will taper this week * Euro inches higher vs dollar on euro zone data, Fed looms By Herbert Lash NEW YORK, Dec 16 (Reuters) - Rising U.S. manufacturing output last month and a surge in euro zone business activity in December lifted global equity markets on Monday, while gains in new orders from purchasing managers in Europe boosted the euro against the dollar. Brent crude oil rose more than 1 percent on expectations of rising demand from the stronger-than-expected European economic data, while supplies remained cut off from Libya. American manufacturing output rose 0.6 percent in November, a fourth straight gain, as production increased almost across the board, the latest sign the U.S. economy is gaining steam. Manufacturing combined with a jump in mining and utilities output to boost industrial production 1.1 percent, the largest increase since November 2012, the Federal Reserve said. U.S. equities posted their worst week in nearly four months last week, a pullback sparked by concerns the economy may weaken if the Fed begins to wind down its stimulus program at a two-day meeting of policymakers that ends on Wednesday. The Fed's bond buying has been seen as a major reason why U.S. stocks have returned 20 percent or more this year. Stocks often swooned on the notion that stimulus would be withdrawn. "Signs of the recovery are becoming increasing evident, and the taper could actually be seen as a good thing - a sign of economic normalization - should the Fed pull the trigger this week," said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts. McMillan also said that investor optimism remains high, which plays into the view that the surge in equities is also due to a bounce-back from last week and buying on the dip. In Europe, Markit's Flash Eurozone Composite Purchasing Managers' Index, a gauge of regional business activity across thousands of companies large and small, rose to 52.1 from 51.7 last month. New orders rose for a fifth month, suggesting the recovery should continue into 2014. European shares jumped more than 1 percent on the data, with one index of regional blue chips gaining almost 2 percent. The steady spate of strong economic data has helped ease fear that an eventual Fed move to scale back its bond purchases would harm the economic recovery, said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm in Toledo, Ohio. "It's the stronger economic data showing that tapering won't have as dramatic an impact on the economy as first thought," Lancz said. MSCI's all-country world stock index rose 0.6 percent, while the FTSEurofirst 300 closed up 1.26 percent at 1,258.31. The euro zone's blue-chip Euro STOXX 50 index jumped 1.95 percent to 2,978.77. Gains in German blue-chips added the most to the FTSEurofirst, as Germany's benchmark DAX rose 1.7 percent. Germany has led the euro zone recovery this year, with the DAX up 20 percent so far in 2013. On Wall Street, the Dow Jones industrial average closed up 129.21 points, or 0.82 percent, to 15,884.57 .The S&P 500 gained 11.22 points, or 0.63 percent, to 1,786.54 and the Nasdaq Composite added 28.542 points, or 0.71 percent, to 4,029.518. Shares of Herbalife Ltd surged 9.4 percent to $74.83 after the company said it had refiled annual reports for fiscal years 2010, 2011 and 2012, along with the first three quarters of 2013, without any material changes. The company has been in the spotlight ever since activist investor Bill Ackman insisted Herbalife is a Ponzi scheme. PricewaterhouseCoopers LLP re-audited the company's financial statements, Herbalife said. The euro edged higher against the dollar on the euro zone data showing rising business activity, while uncertainty over the Fed's bond-buying kept investors wary of the greenback. Market participants have started to price in the possibility of a small reduction in the Fed's bond purchases, resulting in a stronger dollar trend last week. But Vassili Serebriakov, currency strategist at BNP Paribas in New York, said much of the dollar buying had already taken place last week. Fed policymakers meet Dec. 17-18. "There's no reason to buy the dollar ahead of the Fed decision and so this is just position adjustment," Serebriakov said, adding that BNP expects the Fed to start scaling back its asset purchases in March next year. The euro rose just shy of $1.38 on Markit's composite eurozone report and on German manufacturing activity, both of which beat forecasts in December. The composite data was the second-highest reading since mid-2011. The single currency had earlier dipped to around $1.3745 after separate data showed French private-sector activity unexpectedly slowed. The euro was last at $1.3761 up 0.15 percent. The dollar index fell 0.15 percent to 80.093 while against the yen the greenback fell 0.17 percent to 103.01. Brent crude oil rose 1.5 percent, boosted by expectations of rising demand from the euro zone economic data, while supplies from Libya remained sharply curtailed. Brent crude for January rose $1.64 to settle at $110.47 a barrel, while U.S. crude oil for January delivery settled up 88 cents at $97.48 a barrel. German manufacturing data drove a solid expansion in the private sector of Europe's largest economy. "What really moved the market was the German manufacturing numbers," said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago. U.S. government bond prices fell, with the 10-year note 2/32 lower to yield 2.8774 percent. German Bund futures settled unchanged at 140.22 euros.
- Police hunt for motive as search for Malaysian jet spans hemispheres |
- Crimeans vote over 90 percent to quit Ukraine for Russia |
- Ukraine, Russia agree Crimea truce until March 21-Ukraine minister
- Malaysian PM says lost airliner was diverted deliberately |
- Democrats seek ways to limit Obamacare fallout after Florida defeat