* Revived demand for Internet stocks supports Wall Street
* U.S., UK factory data beat forecasts; China PMI misses
* Oil prices fall on China; sterling hit near 5-year high
* May Day holiday mutes trading volume in Europe, Asia
(Updates market action, adds quote)
By Richard Leong
NEW YORK, May 1 Wall Street stocks edged higher
on Thursday, led by a resurgence in Internet shares, while
disappointing data on Chinese manufacturing activity knocked oil
prices to a three-week low.
U.S. bond prices rose, with 30-year yields falling to their
lowest level since last June, as some traders bet that U.S.
payrolls data due on Friday would be weaker than expected,
following unexpectedly weak first-quarter U.S. growth.
Gold prices lost some luster, falling as much as 1 percent
earlier, after the U.S. Federal Reserve reiterated confidence on
its economic outlook despite the slim 0.1 percent growth in U.S.
gross domestic product in the first three months of 2014.
"Internet is the place to be today," said Michael Matousek,
head trader at U.S. Global Investors Inc. in San Antonio, Texas.
"When you have a group that has been beaten up over the past
month, along with a market that is setting new highs, that's a
cue for momentum players to come back into the market."
Customer-review website operator Yelp Inc. led the
Internet sector, with its shares soaring 11 percent to $64.88 a
day after reporting strong revenue growth. Yelp's results lifted
related names, which have slumped recently on concerns that
they, along with biotech "momentum" names, were overvalued.
Revived demand for these stocks supported the broader U.S.
equity market and kept the Dow Jones Industrial average close to
the record close it set on Wednesday.
In afternoon trading, the Dow fell 10.57 points, or
0.06 percent, to 16,570.27, the S&P 500 gained 1.1 point,
or 0.06 percent, to 1,885.05 and the Nasdaq Composite
added 17.649 points, or 0.43 percent, to 4,132.205.
May Day holidays in Europe, much of Asia and parts of Latin
America reduced trading volume.
London's blue-chip FTSE index closed up 0.4 percent
at its highest since early March, boosted by results from Lloyds
Banking Group and TV and media group BSkyB.
Upbeat earnings also helped Japanese stocks stage their biggest
rally in two weeks, with the Nikkei ending up 1.3
The MSCI world equity index, which tracks
shares in 45 nations, rose 0.2 percent, to 414.95.
WORRIES ABOUT CHINA
Equities markets overcame a brief hiccup after data on
China's vast manufacturing sector missed forecasts.
China's official manufacturing PMI came in at 50.4 in April,
up a tick from March but below forecasts for 50.5. A reading
above 50 indicates expansion.
Concerns about energy demand from China, the world's No. 2
economy, together with high oil inventories in the U.S., sent
Brent crude below $107 a barrel before it trimmed some
losses. It was last down $0.73, or 0.68 percent, at $107.34 a
U.S. crude was last down $0.21, or 0.21 percent, at
$99.53 per barrel.
"The only thing stopping the market falling further is
geopolitical factors, such as Ukraine," said Christopher Bellew,
a broker at Jefferies Bache in London.
As Chinese factory growth has struggled to accelerate,
Markit reported its UK manufacturing gauge rose to its strongest
level since November.
Sterling hit its highest against the dollar in
nearly five years, and last traded at $1.6896.
The greenback held steady against other currencies. The
dollar index, which tracks the greenback versus a basket
of six currencies, inched up 0.04 percent to 79.508.
The dollar was held back by lower U.S. yields as some
traders scaled back bets on a relatively strong April jobs
figure in the wake of the dismal GDP report, analysts said.
The yield on the U.S. 30-year Treasury bond fell
4 basis points to 3.42 percent, its lowest since June.
Economists polled by Reuters projected a 210,000 increase in
non-farm jobs last month, up from 192,000 in March.
The risk that the U.S. economy might not recover from a weak
first quarter might keep the Fed from raising short-term rates
before the second half of 2015. They might even cause the
central bank to slow its reduction of its bond purchase program.
The Fed, as expected, said on Wednesday it will cut its
monthly buying of Treasuries and mortgage bonds by another $10
billion to $45 billion.
The continued wind-down of Fed stimulus led to a second day
of selling in gold. Spot bullion prices fell $8.35 or
0.65 percent, to $1,282.94 an ounce.
(Additional reporting by Ryan Vlastelica in New York, Marc
Jones in London, Wayne Cole in Sydney; Editing by Leslie Adler
and Bernadette Baum)