GLOBAL MARKETS-Shares gain in broad global advance, U.S. debt prices fall

Mon May 12, 2014 1:09pm EDT

* Dow hits record high, S&P nears new record
    * Crude oil up on rising Ukraine tensions
    * Euro under pressure after ECB comments
    * U.S. debt prices fall before heavy week of data

 (Adds close of European bond, stock markets)
    By Herbert Lash
    NEW YORK, May 12 (Reuters) - Global equity markets surged on
Monday, with the Dow industrials setting a record high as stocks
advanced in a broad rally spurred by strong corporate results
and an improving economic outlook.
    Prices of U.S. Treasury debt fell, while European shares
scaled six-year highs, underpinned by fresh takeover activity
and renewed speculation about monetary stimulus from the
European Central Bank.  
    On Wall Street, nine of the 10 primary S&P 500 sectors were
in positive territory, with gaining stocks topping declines by
about 4 to 1 on both the New York Stock Exchange and the Nasdaq
stock market. 
    MSCI's all-country world index gained 0.6
percent and the pan-European FTSEurofirst 300's index
of leading shares rose 0.67 percent to close at 1,364.48.
    The Dow set an intra-day high and the S&P 500 was less than
four-tenths of 1 percent away from a new record high.
    The Dow Jones industrial average was up 95.82 points,
or 0.58 percent, at 16,679.16. The Standard & Poor's 500 Index
 was up 14.54 points, or 0.77 percent, at 1,893.02. The
Nasdaq Composite Index was up 57.88 points, or 1.42
percent, at 4,129.75. 
    Weak economic data during the harsh winter and surprising
strength in the bond market had kept money in fixed income, said
David Kelly, chief global strategist for JPMorgan Funds in New
York. But an improving economic outlook has drawn investors back
into stocks, he said.
    "I hate to make day-to-day rationalizations of the behavior
of the market, but the key point is, falling unemployment and
rising economic growth ultimately mean that both interest rates
and stocks prices are likely to move higher," Kelly said.
    Estimate-beating results from Italian lenders UniCredit
 and Banca Popolare di Milano reinforced
optimism about a recovery in Italy, whose shares have
outperformed Germany and France over the past year.
    Equity markets shrugged off results of a weekend referendum
in Ukraine, where pro-Moscow rebel organizers said nearly 90
percent had voted in favor of self-rule, possibly adding more
fuel to a conflict spinning increasingly out of control.
 
    U.S. Treasuries yields rose before a heavy week of data that
includes retail sales and consumer price reports that will be
watched for signs of economic strength and whether inflation is
rising from levels below the Federal Reserve's targets.
    Benchmark 10-year notes were last down 9/32 in
price to push their yield up to 2.6539 percent. 
    The euro traded near break-even against the dollar and yen,
ignoring the weekend referendum in Ukraine.
    Against sterling, however, the euro fell to a 16-month low
on growing bets the European Central Bank will ease monetary
policy just as the Bank of England prepares to raise rates.
    The euro's gains were trimmed after dovish comments from
Austria's central banker, Ewald Nowotny. He told reporters it
would take more than a cut in interest rates to combat low
inflation in the euro zone.
    The euro was flat against the greenback at $1.3757.
The dollar rose 0.25 percent against the yen at 102.10.
    Global oil prices rose as investors braced for a possible
escalation in Ukraine's civil conflict and the European Union
expanded sanctions to Russian individuals and Crimean companies.
    Although it is unlikely the turmoil would lead to a
disruption in energy supplies from Russia, top global oil
exporter Saudi Arabia volunteered to supply more crude in the
event of a shortage. 
    Brent crude was up 47 cents at $108.36 a barrel. 
U.S. crude gained 54 cents to $100.53 a barrel.

 (Reporting by Herbert Lash; Additional reporting by Marc Jones
in London; Editing by Dan Grebler)
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