* U.S. durable goods orders and housing prices rise
* China's central bank soothes credit worries
* Government debt prices slip on economic data
* Oil tops $101 on easing liquidity fears, Canada floods
By Herbert Lash
NEW YORK, June 25 Global equity markets rose and
the dollar recovered from early losses on Tuesday after U.S.
economic data ranging from manufacturing to housing to consumer
confidence delivered a dose of optimism to investors who have
been preoccupied with worries over Federal Reserve policy.
Orders for durable goods rose more than expected in May and
a gauge of planned business spending gained for a third straight
month, while prices of single-family homes posted their biggest
rise in seven years in April.
Also on Tuesday, the Conference Board, a private business
research group, reported that its U.S. consumer confidence index
rose in June to 81.4, well above economists' expectations, from
a downwardly revised 74.3 in the prior month.
At first blush, the data seemed bullish for markets as it
showed the economy is improving. But such improvement suggests
the Fed could proceed to ease its bond-buying program, an
expectation that pushed up bond yields and drove down stocks in
"The market trend has turned to the downside. It is now
easier to sell rallies than to buy dips, so strategies have
flipped," said Donald Selkin, chief market strategist at
National Securities in New York, which has about $3 billion in
assets under management.
European shares bounced off seven-month lows while MSCI's
all-country world equity index rose from prices
last seen at the beginning of the year. The world index rose 0.8
The FTSEurofirst 300 of leading European shares
rose 1.5 percent to close at 1,130.37, a day after closing at
its lowest level since late November.
The Dow Jones industrial average was up 115.53
points, or 0.79 percent, at 14,775.09. The Standard & Poor's 500
Index was up 15.34 points, or 0.98 percent, at 1,588.43.
The Nasdaq Composite Index was up 25.37 points, or 0.76
percent, at 3,346.12.
The pause in the market's recent rout began when two Fed
policymakers on Monday downplayed the notion of an imminent end
to the central bank's money-printing and said the market
reaction was not yet a cause for concern.
Asian markets then capped a day of wild swings, during which
Chinese stocks plunged to their lowest level since the global
financial crisis began, followed by a late rally on hopes
authorities in China would step in to prevent a crisis.
China's central bank fueled the talk at a news briefing
where it sought to allay fears of a credit squeeze by committing
to guide interest rates to "reasonable" levels after they had
been allowed to spike over the past week.
The dollar extended gains against the yen and euro on
Tuesday after data showed sales of new U.S. single-family homes
rose to their highest in nearly five years in May, confirming
the housing market's strengthening tone.
The dollar rose against the yen, to 97.76 yen from
about 97.61 yen before the data, up 0.04 percent on the day.
The euro fell to the session low of $1.3066 where it
traded before the data. It was trading at 1.3083, down 0.26
"The dollar has been trading on Fed speculation for the last
two weeks," currency strategist John Doyle at Tempus Inc in
Washington said. "Yesterday, comments from two Fed officials
were more dovish than Bernanke but attention has now shifted to
durable goods, which were good for the 'tapering sooner'
Prices of U.S. Treasuries edged down slightly in choppy
trade, while German Bund futures pared early gains on the U.S.
The benchmark 10-year U.S. Treasury note was
down 9/32 in price to yield 2.5763 percent.
Bund futures settled at 140.54, up 23 ticks from
Monday's close. Bunds rose as high as 141.01 before the data.
Oil was above $101 a barrel, rebounding from a three-week
low, as investor concern eased about a liquidity crunch in China
and as Canadian pipeline closures threatened exports to the
Brent crude rose 36 cents to $101.52 a barrel. U.S.
oil rose 24 cents to $95.42.
"Stock markets are up and commodity prices are up across the
board," said Carsten Fritsch, analyst at Commerzbank in
Frankfurt, citing the Chinese officials' comments as prompting a
change in market sentiment.