* U.S. trade gap smallest in four years
* European equity markets rise on hopes of economic recovery
* Dollar gains on trade data, might boost U.S. GDP estimates
* Oil rises on Mideast, U.S. supply concerns
By Herbert Lash
NEW YORK, Jan 7 Global equity markets rose and
the dollar strengthened on Tuesday on encouraging jobs data from
Germany and news of the lowest U.S. trade deficit in four years,
the latest evidence of a more robust American economy.
The U.S. Commerce Department said the trade gap fell 12.9
percent to $34.3 billion in November, the smallest deficit since
October 2009. October's trade shortfall was revised down to
$39.3 billion from a previously reported $40.6 billion.
The bigger-than-expected decline - economists polled by
Reuters forecast November's trade deficit would slip to $40.0
billion - could spur higher fourth-quarter growth estimates.
In Europe, an unexpected fall in German unemployment last
month on a seasonally adjusted basis was the first drop since
July. The decline bolstered hopes domestic consumption could
boost growth in Europe's biggest economy.
Investors also welcomed a successful Irish debt sale, the
government's first since the country exited an international
bailout in December, as an indication Europe's battered
periphery was on the road to recovery. European equity indexes
rose to 5-1/2 year highs, led by heavy trade in Spain.
The upbeat trade data helped turn sentiment in U.S. equity
markets after a slow start to the year, building on a record
flow of investment to stocks and related securities in 2013.
"We're getting a nice little snapback following a pretty
soggy first couple of days, which created some anxiety because
some people think that sets the tone for the year," said
Nicholas Colas, chief market strategist of the ConvergEx Group
in New York.
"Volume and news remain light, but people expect this year
to be positive so the negative start probably got a bit
overdone," Colas said.
U.S.-listed equity mutual funds and exchange-traded funds
took in a record $352 billion in 2013, topping a previous record
$324 billion in 2000, according to TrimTabs Investment
MSCI's all-country world stock index rose
0.35 percent, while the FTSEurofirst 300 index of top
European shares gained 0.8 percent to 1,319.74, its highest
closing level since mid-2008.
Spain's IBEX index surged 2.9 percent on volume that
was more than double an average session.
The benchmark S&P 500 chalked up its first gain of the new
year, and the Nasdaq jumped 1 percent before paring some gains.
The Dow Jones industrial average closed up 105.84
points, or 0.64 percent, at 16,530.94. The S&P 500 rose
11.11 points or 0.61 percent, to 1,837.88 and the Nasdaq
Composite added 39.501 points, or 0.96 percent, to
Healthcare was the leading sector after Deutsche
Bank upgraded UnitedHealth Group Inc to "buy."
Shares of UnitedHealth, a Dow component, jumped 3.1 percent
to $77.51, while Tenet Healthcare climbed 4.9 percent to
$46.10, one of the S&P's biggest percentage gainers.
Earlier, Asian shares fell for a fourth day, led by a 0.6
percent drop on Tokyo's Nikkei index.
The dollar gained, buoyed by the U.S. trade data. Stronger
growth could prompt the Federal Reserve to speed up the tapering
of its monthly bond purchases.
However, Eric Rosengren, president of the Federal Reserve
Bank of Boston, said low inflation keeps the U.S. economy
vulnerable and he reiterated a warning that policy stimulus
should be removed "only gradually." Rosengren is one of the most
dovish of U.S. central bankers.
The dollar traded 0.34 percent higher at 104.56 yen,
but remained below a five-year peak of 105.44 yen set last week.
The euro was last down 0.09 percent at $1.3615.
The dollar index, which tracks the greenback against a
basket of six major currencies, was up 0.25 percent at 80.854
Brent oil rose above $107 a barrel after five straight
declines, supported by glitches at a handful of North American
refineries that curtailed supply, and as new worries arose over
Libyan output and fighting in Iraq.
Brent crude rose 62 cents to settle at $107.35,
after settling lower in the previous five sessions. U.S. crude
settled 24 cents higher at $93.67.
U.S. government bond prices rose, with the 10-year U.S.
Treasury note up 5/32 in price to yield 2.9428
German Bund futures settled up 22 ticks at 139.76
Bumper demand for Ireland's debt sale pushed its borrowing
costs to an eight-year low and the Spanish government's costs to
the lowest since 2009.
Demand for Irish 10-year debt was nearly four times the 3.75
billion euro issue, boosting sentiment across the euro zone
periphery and pushing down regional bond yields. The sale could
make it easier for Portugal to exit its bailout.
Irish 10-year bond yields fell to 3.27 percent,
10-year Greek yields fell to their lowest since
June 2010 at 7.83 percent and Portuguese yields
dropped to 5.42 percent - their lowest since last May.
Ten-year Spanish yields fell to their lowest
since December 2009 at 3.798 percent and equivalent Italian
yields were at 3.88 percent.
Gold fell as a stronger dollar and the rebound in U.S. stock
prices prompted investors to take profits in bullion after five
straight sessions of gains. U.S. gold futures for
February delivery settled down $8.40 at $1,229.60 an ounce.