Global stocks climb on upbeat U.S. data; euro falls

NEW YORK Mon Apr 14, 2014 4:20pm EDT

1 of 4. Traders work on the floor of the New York Stock Exchange April 11, 2014.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Global equities rose on Monday as robust U.S. retail sales data signaled economic growth, while the euro fell after the European Central Bank gave its strongest signal yet that it would ease policy to cool the single currency.

The encouraging retail sales from the world's biggest economy, which had been bogged down by a harsh winter, overrode fears of a military conflict in Ukraine that had punished stock prices earlier. The upbeat news was a respite for the Standard & Poor's and Nasdaq indexes, which had just suffered their worst week since June 2012.

Ukraine's president threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave and another group of rebels attacked a police headquarters in the region. The flare-up came less than a month after Russia completed its annexation of Ukraine's southern Crimea peninsula.

But the data showing that U.S. retail sales jumped 1.1 percent in March, the biggest monthly rise in 1-1/2 years, drew investors back into riskier investments.

"This is the first report that activity is bouncing back from the winter weather," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee. "This should set the foundation for stocks to go up a bit and bond yields to go higher."

On Wall Street, the Dow Jones industrial average closed up 146.42 points, or 0.91 percent, to 16,173.17, the S&P 500 gained 14.88 points, or 0.82 percent, to 1,830.57, and the Nasdaq Composite added 22.96 points, or 0.57 percent, to 4,022.694.

Financial stocks were among the largest gainers after Citi said its quarterly net profit rose as a smaller loss on its troubled assets offset lower revenue and profit from its core trading and lending businesses. Citi shares jumped 4.4 percent to $47.67.

Biotech shares remained volatile, ending flat in a session that saw the group rise as much as 2.7 percent and fall as much as 1.9 percent. The group entered bear market territory - defined as a 20 percent drop from its peak - on Friday.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.3 percent to 405.26 points.

The pan European FTSEurofirst 300 ended 0.5 percent higher at 1,319.46. The index shed 2.9 percent last week.

Cyclical shares lagged broader indexes as the tension in Ukraine and volatile global markets prompted investors to take a more cautious stance and cash in on some of the best performers of the past nine months

The tensions over Ukraine took a toll on Russian shares, which tumbled 1.3 percent, while the ruble fell 0.8 percent to its weakest level against the dollar in nearly three weeks.

European Union foreign ministers agreed to widen sanctions against Moscow, while the White House said it was seeking ways to impose more "costs" on Russia. Renewed tension between Russia and the West raised anxiety of imposing increasingly tough measures that will inevitably harm both sides.

"The escalation sharply increases risks of an all-out civil war in Ukraine," Bank of America Merrill Lynch analysts said in a research note.

Earlier, Japan's Nikkei stock average ended down 0.4 percent at a six-month closing low. It plunged 7.3 percent last week, the biggest weekly fall since the devastating earthquake and tsunami in March 2011.

The stabilization in stock prices led some traders to pare their holdings in less risky U.S. and German government bonds.

Benchmark 10-year Treasuries notes were 5/32 lower in price with a yield of 2.639 percent, and German Bund futures fell 22 basis points to 143.86.

EURO FALLS

More promises from the ECB over the weekend that it will take action to head off further gains in the euro pulled the euro back to $1.3821, down 0.45 percent from Friday's high of $1.3905. Against the yen, the euro fell 0.3 percent to 140.65 yen, near the low end of its trading range since early March.

"The strengthening of the exchange rate would require further monetary policy accommodation," ECB head Mario Draghi said at a weekend meeting of the International Monetary Fund.

Benoit Coeure, another top ECB member, also laid out some asset-buying options, a tactic which appears to be finally gaining traction at the central bank.

The ECB "is taking the value of the euro more seriously in their approach to monetary policy," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

The dollar gained against most major currencies on the strong March retail sales report. It nudged up nearly 0.2 percent to 101.74 yen after touching a 3-1/2-week low of 101.32 yen on Friday, though that was far from the 2-1/2-month high of 104.13 yen set on April 4.

Among commodities, spot gold benefited from the move toward safe-haven assets on the worries over Ukraine, adding 0.5 percent to $1,325.40 an ounce, after earlier marking a three-week high.

Oil prices were also underpinned by fears that the tension between Russia and Ukraine could escalate. Ukraine is a major supply route for Russian gas to Europe.

Brent crude for May delivery settled up $1.74, or 1.62 percent, at $109.07 a barrel. U.S. crude settled up 31 cents, or 0.30 percent, at $104.05 per barrel.

(Additional reporting by Sam Forgione in New York, Marc Jones and Marius Zaharia in London, Megan Davies in Moscow; Editing by Leslie Adler)