* U.S. S&P stock index highest intraday since Oct. 2007
* European shares dip after Italian credit downgrade
* Wall Street's "fear gauge" falls to lowest since 2007
* U.S. oil prices rebound after losses on Chinese data
* Dollar near 3-1/2-year high vs yen on U.S. jobs growth
By Richard Leong
NEW YORK, March 11 Wall Street stocks rose on
Monday, driving the Dow to another record high, on optimism
about the U.S. economy, while U.S. oil prices rebounded after
disappointing Chinese industrial data spurred an initial drop.
The gain in equities curbed safe-haven demand for U.S.
government debt, driving U.S. Treasury debt prices modestly
lower. The rally in equities, along with optimism about the
economic outlook after Friday's surprisingly strong U.S. jobs
report, also dented the safe-haven appeal of gold, though the
metal edged higher on the Chinese data.
European shares were weaker after a cut in Italy's credit
rating late on Friday by Fitch Ratings rattled investors'
confidence about Italy's public finances and drove down banking
The dollar clung to gains from Friday's U.S. jobs report,
trading near a 3-1/2-year high against the yen and a three-month
peak versus the euro.
The benchmark Standard & Poor's 500 stock index
extended its winning streak to seven sessions and touched its
highest intraday level since Oct. 15, 2007.
Friday's U.S. jobs report, along with encouraging data on
the housing market, reinforced the appetite for stocks and views
that the market will post further gains with help from the
Federal Reserve's stimulus efforts.
"There's real belief in this rally," said Tim Ghriskey,
chief investment officer of Solaris Group in Bedford Hills, New
York. "There are lots of investors out there looking for
opportunities to put more money to work in equities, and they're
using these little pullbacks we've had - and there haven't been
many - as purchasing opportunities."
Wall Street's "fear gauge," the CBOE Volatility Index, also
known as the VIX, fell to the lowest level since February
2007, closing 8.2 percent lower at 11.56.
The resilience on Wall Street and a 0.53 percent gain in
Tokyo shares helped MSCI's world equity index
rise 0.39 percent to 361.51, near its mid-2008
The Dow closed up 50.22 points, or 0.35 percent, at
14,447.29. The S&P 500 finished up 5.04 points, or 0.32 percent,
at 1,556.22. The Nasdaq Composite Index ended up 8.51
points, or 0.26 percent, at 3,252.87.
The Dow has gained over 10 percent for the year, while the
S&P 500 is up more than 9 percent.
Europe's broad FTSEurofirst 300 index closed off
0.05 percent at 1,194.64, down from September 2008 peaks hit
China reported over the weekend that annual industrial
production for January and February combined rose 9.9 percent,
the lowest since October 2012, while its consumer price index
jumped more than expected last month.
Fitch on Friday cut Italy's debt to BBB-plus from A-minus
and gave the rating a negative outlook, raising the risk its
next ratings change will be a further downgrade.
Anxiety over further deterioration in Italy, the euro zone's
third-biggest economy, pushed 10-year Italian government bond
yields up 7 basis points to 4.66 percent.
"I think the Italian downgrade is acting as a bit of a
wake-up call," said Alastair Winter, chief economist at
investment bank Daniel Stewart & Co in London.
The benchmark 10-year U.S. Treasury note traded
in a narrow range and was last down 2/32 in price with a 2.056
percent yield. The 10-year yield touched an 11-month intraday
high of 2.087 percent on Friday.
Gold posted modest gains, last up 0.2 percent at $1,581.40
an ounce. Gold bullion was seen staying within a range of
$1,560 to $1,590.
OIL FALLS, DOLLAR FIRM
In addition to Italy's downgrade, the slower-than-expected
growth in Chinese factory output briefly crimped investor
sentiment on oil, copper and other raw materials.
U.S. oil futures settled up 11 cents or 0.12 percent
at $92.06 a barrel, erasing an early loss of more than $1.
But Brent crude settled 63 cents or 0.57 percent
lower to $110.22 a barrel, after ending last week marginally
higher to snap three straight weekly losses.
Three-month copper on the London Metal Exchange
closed at $7,755 a tonne, up from a previous close of $7,740,
having earlier hit a one-week low of $7,667 a tonne.
In the foreign exchange markets, the dollar added to gains
made against most major currencies after Friday's payrolls data
boosted hopes of a steady U.S. economic recovery this year.
The data has also fueled speculation the Federal Reserve
could back off from its ultra-loose monetary policy sooner than
anticipated, and this added to the currency's appeal as traders
speculated about looser policies by other major central banks
The dollar dipped 0.19 percent at 82.52 against a basket of
major currencies, not far from the seven-month high of
82.92 hit on Friday. The currency has risen nearly 5 percent
since early February.
The euro was flat at $1.3049, not far from a
three-month low of $1.2955 also hit on Friday, while the yen
managed a 0.2 percent rise against the greenback at 96.27