* Fed's Williams says stimulus withdrawal could start this
* U.S. consumer sentiment rises to highest in nearly six
* U.S. dollar index hits nearly three-year high, stocks
* U.S. Treasuries prices fall further after sentiment data
By Herbert Lash
NEW YORK, May 17 The dollar soared on Friday
against a basket of currencies, reaching a nearly three-year
peak, and global equity indexes gained as speculation mounted
over whether the Federal Reserve would soon begin to rein in its
Wall Street advanced, with the benchmark S&P 500 rebounding
from its worst decline in nearly three weeks. European equity
indexes climbed in sync with a rally in carmakers' shares, which
were bolstered by signs of a revival in domestic sales.
U.S. stocks also got a lift from a survey showing a rebound
in U.S. consumer sentiment in early May to the highest level in
nearly six years as Americans felt better about their financial
and economic prospects, particularly among upper income
The dollar's strength was largely attributed to the euro,
which fell to a six-week low on market talk that the European
Central Bank could introduce negative deposit rates, a move that
would make banks pay to park their cash overnight with the ECB.
The dollar index, which measures its value against a
basket of six major currencies, rose to 84.371, its highest in
nearly three years. Around midday in New York, the dollar index
was up 0.8 percent at 84.255.
The euro fell 0.4 percent to $1.2830, while the
dollar hit a 4-1/2 year high versus the Japanese yen, up
0.66 percent at 102.91.
"People are positive about the U.S. economic recovery
despite recent weak data and today's theme is mostly about the
broadly strong dollar," said Charles St-Arnaud, FX strategist at
"Meanwhile, data in the euro zone shows they remain in a
recession and raised expectations the ECB will take further
action is weighing on the euro," he said.
A measure of global equity activity, MSCI's all-country
world stock index, dipped 0.02 percent, pulled
lower by emerging markets.
The Dow Jones industrial average was up 62.48 points,
or 0.41 percent, at 15,295.70. The Standard & Poor's 500 Index
was up 8.02 points, or 0.49 percent, at 1,658.49. The
Nasdaq Composite Index was up 15.85 points, or 0.46
percent, at 3,481.10.
Among other indexes, the Russell 2000 index was up
6.96 points, or 0.71 percent, at 992.30.
The FTSEurofirst-300 index of European shares
bounced off session lows to rise 0.11 percent to provisionally
close at 1,246.79.
In London, the FTSE-100 index gained 0.53 percent to
Gold fell for a seventh straight session, its longest losing
streak in four years, driven by speculation that the Fed may
soon ease its asset-purchase program to boost the economy.
Spot gold prices lost $23.69 to $1,362 an ounce.
U.S. stocks and gold prices fell on Thursday, while the
dollar rose following comments from John Williams, president of
the Federal Reserve Bank of San Francisco, that the Fed could
begin easing up on stimulus this summer.
Prices for U.S. Treasuries added to losses after the Thomson
Reuters/University of Michigan's preliminary reading on the
overall index on consumer sentiment rose to 83.7 in early May
from 76.4 last month, topping economists' expectations for 78.
The May reading was the highest level since July 2007.
The benchmark 10-year U.S. Treasury note fell
15/32 in price to yield 1.9297 percent.
In Europe, German Bunds hit one-week highs, with traders
citing talk that the ECB was checking with some banks on whether
they were ready for a potential cut in its deposit rate to below
German Bund futures rose as much as 43 ticks on the
day to 145.74, before paring gains to trade 14 ticks higher.
Oil pared gains on concern about the strength of global
Brent crude rose 13 cents to $103.91 a barrel. U.S.
crude futures rose 24 cents, or 0.25 percent, to $95.40 a