* Surge in factory activity boosts U.S. equities
* Weak euro zone, Chinese data hit shares outside U.S.
* Euro falls vs dollar after PMI data
By Herbert Lash
NEW YORK, Feb 20 U.S. stocks and the dollar rose
on Thursday on data showing American factory activity
accelerated in February at its fastest clip in nearly four
years, but surveys showing a soft patch in China and parts of
Europe dragged on global equity markets.
Markit's preliminary U.S. Manufacturing Purchasing Managers
Index rose to 56.7 in February, its highest level since May
2010, from a final reading for January of 53.7. A reading above
50 indicates expansion.
Wall Street has shrugged off recent tepid data that
suggested economic weakness, blaming the soft results on an
unusually cold winter.
"The manufacturing data is extremely positive, especially
coming after a spate of bad news at a time when the (Federal
Reserve) seems committed to slowing stimulus," said Nicholas
Colas, chief market strategist at the ConvergEx Group in New
Even so, Colas said the U.S. equity market's strength is
somewhat surprising given weakness in overseas markets.
"It is good to see investors buying on dips, but I've also
been hearing a lot more bearish chatter," Colas said.
Shares in Europe retreated from four-week highs on Chinese
and southern European data, while a poor corporate earnings
outlook hurt cyclical sectors such as mining and industrials.
But European markets trimmed losses in late trading on the
U.S. factory report. News that the number of Americans filing
new claims for unemployment benefits fell last week also buoyed
markets, as it pointed to steadily improving U.S. labor market
conditions despite two straight months of weak hiring.
Markit's Composite Purchasing Managers' Index for the euro
zone dipped in February, although it held just below January's
31-month high. The service sector in France shrank at its
fastest pace in nine months.
MSCI's all-country world equity index, a
measure of equity markets in 45 countries, was down 0.13
percent. Its emerging markets index was down 0.93
percent, while the FTSEurofirst 300 index of leading
European shares closed down 0.01 percent to 1,338.77.
On Wall Street, the benchmark S&P 500 ended less than 0.5
percent below its record close in January of 1,848.38 points.
The Dow Jones industrial average closed up 92.67
points, or 0.58 percent, to 16,133.23. The S&P 500 gained
11.03 points, or 0.6 percent, to 1,839.78, and the Nasdaq
Composite added 29.591 points, or 0.7 percent, to
Shares of both Facebook and Tesla shot to record highs.
Tesla Motors Inc hit an all-time high of $215.21 a
day after it reported fourth-quarter results that topped
expectations and said deliveries of its luxury Model S electric
sedan would surge more than 55 percent this year. Shares closed
up 8.4 percent at $209.97.
Social networking giant Facebook Inc surged a day
after it said it would buy mobile-messaging startup WhatsApp for
$16 billion in cash and stock, plus an additional $3 billion
worth of restricted stock units to WhatsApp's founders. Facebook
shares rose 2.3 percent to $69.63 in heavy trading after earlier
hitting a new high of $70.11.
Wal-Mart Stores Inc, the world's biggest retailer,
was the Dow's biggest decliner, falling 1.8 percent to $73.52
after the company reported a drop in U.S. same-store sales and
gave an earnings outlook that was below expectations.
The dollar strengthened on the relatively strong U.S. data
and after euro zone business surveys pointed to a sluggish
recovery and a fragile outlook, which hurt the euro.
The dollar index rose 0.17 percent to 80.277, while
against the Japanese yen the dollar traded near
break-even at 102.32 yen.
The euro fell as low as $1.3688, pulling away further
from a seven-week high of $1.37735 struck on Wednesday. It last
traded down 0.09 percent at $1.3720.
"The U.S. economic data this morning definitely benefited
the dollar across the board," said Blake Jespersen, managing
director of foreign exchange at BMO Capital Markets in Toronto.
Treasuries prices fell as the mostly positive U.S. economic
data met expectations.
The 10-year U.S. Treasury note trimmed losses to
fall 5/32 in price to yield 2.7518 percent.
Spanish bond yields bounced off eight-year lows even as
another plump debt sale helped Madrid complete about a quarter
of its 2014 debt program just as uncertainty over the euro zone
growth outlook resurfaced.
Spanish 10-year yields rose 48 basis points to
German 10-year Bund yields, the benchmark for
euro zone borrowing costs, were up 32 basis points at 1.694
U.S. crude oil inched lower after data showed U.S. heating
oil stockpiles fell less than expected and on the weak Chinese
Bund futures fell 46 ticks to settle at 143.45.
Brent crude slipped toward $110 a barrel after the data
pointing to slower growth in China, the world's second-largest
Brent eased 17 cents to settle at $110.30 a barrel.
U.S. crude edged down 39 cents to settle at $102.92.