GLOBAL MARKETS-Shares advance globally; oil rises; U.S. debt prices fall

Mon May 12, 2014 3:24pm 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 oil settlement prices)
    By Herbert Lash
    NEW YORK, May 12 (Reuters) - Global equity markets surged on
Monday, with the Dow industrials hitting 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, eight of the 10 primary S&P 500 sectors were
higher as gaining stocks topped declines by about 4 to 1 on both
the New York Stock Exchange and the Nasdaq market. 
    MSCI's all-country world index gained 0.66
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 about 1
point away from a new record high.
    The Dow Jones industrial average rose 110.33 points,
or 0.67 percent, to 16,693.67. The Standard & Poor's 500 Index
 was up 17.18 points, or 0.91 percent, at 1,895.66. The
Nasdaq Composite Index was up 71.21 points, or 1.75
percent, at 4,143.08. 
    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 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, as well as 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 2.6557 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 down 0.01 percent against the greenback at
$1.3755. The dollar rose 0.3 percent against the yen
 at 102.16.
    Crude oil futures rose as investors braced for a possible
supply disruption after the Ukraine referendum prompted the
European Union to widen sanctions to Russian individuals and
Crimean companies. 
    Top global oil exporter Saudi Arabia volunteered to supply
more crude in the event of a shortage. 
    Brent crude settled up 52 cents at $108.41 a barrel.
 U.S. crude gained 60 cents to settle at $100.59 a
barrel.

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