* Stocks gain on earnings optimism, narrower U.S. trade gap
* Euro strengthens, setting one-week high against dollar
* Oil prices rise, bonds retreat after stocks rally
By Herbert Lash
NEW YORK, April 12 Global stocks rose and the
euro gained on Thursday after a narrower U.S. trade gap prompted
by record-high exports eased concerns about a weak labor market
and stoked optimism over the outlook for corporate earnings.
Shares on Wall Street and in Europe advanced broadly after
briefly falling on data about unexpectedly high initial claims
for unemployment benefits, which boosted worries that recent
jobs data for March indicated a still struggling U.S. labor
But other data showed that the U.S. trade deficit shrank
12.4 percent to $46 billion in February, the biggest
month-to-month decline since May 2009, the Commerce Department
said, as exports hit a record high.
The record exports could lead economists to raise their
estimates for first-quarter U.S. gross domestic product and
bolster growth in the second quarter, which bodes well for the
beaten-down outlook for earnings.
"The trade data is a lot better than expected," said Eric
Green, chief economist at TD Securities in New York.
"There was a big improvement in the real trade deficit, so I
think it's reasonable to expect a modest tailwind to growth in
Q2 coming from the trade data, as opposed to a modest headwind.
I think this puts GDP at 2 percent or higher."
The Dow Jones industrial average was up 81.63 points,
or 0.64 percent, at 12,887.02. The Standard & Poor's 500 Index
was up 9.23 points, or 0.67 percent, at 1,377.94. The
Nasdaq Composite Index was up 23.51 points, or 0.78
percent, at 3,039.97.
Traders bid up material and energy shares as chatter
circulated about a stronger outlook for Chinese growth on
speculation that China on Friday will release data that will
show GDP growth accelerated in the first quarter.
The S&P materials sector rose 2.0 percent, while the
energy sector gained 1.4 percent.
The FTSEurofirst 300 index of top European shares
was up 1.1 percent at 1,044.69.
"Earnings so far have been better than expected, and that
reinforces the view that forecasts had gotten too pessimistic,"
said David Joy, chief market strategist at Ameriprise Financial
in Boston, where he helps oversee $571 billion in assets under
"Expectations had been revised significantly lower, but now
they're stabilizing, and I think there's a chance we could
exceed them," Joy said.
Initial claims for unemployment benefits unexpectedly rose
last week, raising concerns the U.S. labor market continues to
Initial claims increased 13,000 to a seasonally adjusted
380,000, the Labor Department said, defying economists'
expectations for a drop to 355,000.
Some economists blamed the Easter holiday for the spike in
claims and expected applications to trend lower in coming weeks.
U.S. government debt prices pared gains to trade at
break-even or lower. The benchmark 10-year U.S. Treasury note
was unchanged in price to yield 2.04 percent.
The dollar was down against a basket of major
trading-partner currencies, with the U.S. Dollar Index
off 0.48 percent at 79.410.
The euro was up 0.50 percent at $1.3175.
Brent crude oil rose above $120 per barrel.
ICE Brent futures added 32 cents to $120.50 a
barrel. U.S. crude oil was up $1.16 at $103.86.
Before the U.S. data release, European shares had traded
higher and the euro hit a one-week high against the dollar as
investors took in stride a jump in Italy's borrowing costs
despite growing concern about the euro zone debt crisis.