* Strong U.S. manufacturing data leads Wall Street rebound
* Euro hovers near two-month low vs dollar
* Global shares slip as China, euro zone data disappoints
* Government debt, dollar gain on safe-haven buying
By Herbert Lash
NEW YORK, March 1 Global equity markets fell and
the euro slumped to a two-month low on Friday as weak economic
data from Europe and China weighed on prices, but Wall Street
stocks rebounded on news of surprisingly strong U.S.
manufacturing and consumer sentiment.
Government bonds rallied and the dollar rose in safe-haven
buying as concerns about imminent U.S. spending cuts and the
post-election political stalemate in Rome remained major
headwinds for assets considered more risky.
Growth in U.S. manufacturing, which rose at its fastest pace
in over a year and a half in February, offset some jitters. The
Institute for Supply Management said its index of national
factory activity rose to 54.2 from 53.1 in January, topping
economists' forecasts of a pullback to 52.5.
While economic data from Europe and China was disappointing,
there are clear signs of economic recovery in the United States
and some evidence that Japan is beginning to turn around, a
potential swing factor in 2013, said Andrew Milligan, head of
global strategy at Standard Life Investments in Edinburgh.
"We can stand back and have a wider discussion if you wish
about politics and markets, and another discussion about whether
equity prices have gotten ahead of themselves, but as of Friday
it was a most reassuring number," Milligan said of the ISM
A report showing U.S. consumer sentiment rose in February as
Americans were more hopeful that the labor market will improve
provided another sign of optimism, even as confidence in fiscal
policy was near all-time lows.
Stocks on Wall Street opened lower but rebounded after the
ISM report and release of the Thomson Reuters/University of
Michigan's final reading on consumer sentiment in February.
The automatic spending cuts sparked by "sequestration" will
take some growth off the U.S. economy but not enough to push it
back into recession, Milligan said.
Standard & Poor's said it expects the sequester to be
temporary and have a mild downside effect on economic growth. A
long-term package of spending cuts and revenue increases would
be in place by the second quarter, the ratings agency said.
The Dow Jones industrial average closed up 35.17
points, or 0.25 percent, at 14,089.66. The Standard & Poor's 500
Index was up 3.52 points, or 0.23 percent, at 1,518.20.
The Nasdaq Composite Index was up 9.55 points, or 0.30
percent, at 3,169.74.
MSCI's all-country world equity index fell
0.18 percent to 353.79. In Europe, the FTSEurofirst 300
of leading regional companies fell 0.24 percent to close at
The euro tumbled to a 2013 low against the U.S. dollar,
which rose to a six-month high against a basket of currencies
as weak euro zone data highlighted a growing economic
disparity with the United States.
The euro fell to a 2013 trough of $1.2968, its lowest
since Dec. 10, and was last down 0.27 percent on the day at
The dollar rallied to a session high versus the Japanese yen
as an array of data buoyed the safe-haven U.S. currency. The
dollar rose as high as 93.68 yen, and last traded at
93.55, up 1.1 percent on the day.
U.S. Treasuries prices rose as impending U.S. budget cuts
and concern about economic weakness in Europe inspired a bid for
safe-haven U.S. debt.
Economists say $85 billion in automatic "sequestration" cuts
to federal spending, on top of fiscal restraint already in place
due to the expiry of the U.S. payroll tax cut, will likely trim
U.S. economic growth this year.
The benchmark 10-year U.S. Treasury note was up
9/32 in price to yield 1.8481 percent.
Crude oil slipped to a six-week low below $110 per barrel,
erasing all gains so far in 2013, weighed by growth worries as
political gridlock brought the prospect of massive U.S.
government spending cuts.
Brent crude for April delivery settled down 98 cents
at $110.40 a barrel. U.S. oil settled down $1.37 a barrel