NEW YORK (Reuters) - Global stocks rebounded and the U.S. dollar rose on Tuesday after the biggest monthly jump in U.S. consumer confidence in six years suggested an improving economy and overshadowed worries about a North Korean nuclear test.
Oil prices hit a fresh 6-month high, bolstered by the confidence data from the U.S. Conference Board and comments by Saudi Arabia, the biggest member of the Organization of Petroleum Exporting Countries, that crude oil prices may continue to rise.
U.S. and euro-zone government debt prices fell after the consumer confidence data reduced the need for safe-haven assets like bonds, which had been bid up on news of the North Korean nuclear test and missile launches.
The U.S. dollar rose against the yen while worries about Germany’s economy and banks knocked the euro off last week’s near five-month high.
The euro’s slide was fairly limited though by the end of the day as Wall Street stocks rallied and the strong U.S. data encouraged investors to take on more risk.
“The consumer confidence number was tremendous. That’s a key piece for boosting risk appetite,” said Melvin Harris, market strategist at Advanced Currency Markets in New York.
The Conference Board said its index of consumer sentiment soared in May to an 8-month high of 54.9 from a revised 40.8 in April, well above forecasts of 42.0.
The May jump was a welcome shift from a record low hit in February and lifted U.S. stocks more than 2.0 percent, with the technology-laden Nasdaq rising more than 3.0 percent after a broker upgrade of Apple Inc (AAPL.O).
Apple’s shares jumped 6.8 percent as Morgan Stanley said the company will see iPhone-driven growth over the next two years and raised its price target on the stock.
“Today the market is celebrating the return of some sign of consumer confidence,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. “It was so strong, even the dismal housing numbers couldn’t hurt the market.”
Other data showed prices of single-family homes fell in March from a year earlier. The pace of decline, however, slowed for a second consecutive month.
The Dow Jones industrial average .DJI closed up 196.17 points, or 2.37 percent, at 8,473.49. The Standard & Poor's 500 Index .SPX rose 23.33 points, or 2.63 percent, at 910.33. The Nasdaq Composite Index .IXIC gained 58.42 points, or 3.45 percent, at 1,750.43.
European shares closed higher after the U.S. data lifted shares that had been lower on worries about North Korea’s latest nuclear test and missile launches.
The FTSEurofirst 300 .FTEU3 index of top European shares rose 0.9 percent to close at 865.14 points.
Oil company stocks gained after crude prices pared losses.
“The U.S. isn’t looking that panicked by the North Korean missile launches that followed the underground atomic tests over the weekend, instead finding strength off numbers such as the better-than-expected consumer confidence reading,” said Jimmy Yates, head of equities at CMC Markets.
The dollar was up against a basket of major currencies, with the U.S. Dollar Index .DXY up 0.13 percent at 80.131.
The euro fell 0.16 percent at $1.3982. Against the yen, the dollar was up 0.15 percent at 94.84.
The benchmark 10-year U.S. Treasury note fell 25/32 in price to yield 3.54 percent. The 2-year U.S. Treasury note fell 2/32 in price to yield 0.92 percent.
OPEC ministers meeting in Vienna are expected to leave output levels unchanged on expectations prices will continue to rise despite swollen stockpiles and slumping demand.
U.S. crude oil rose 78 cents to settle at $62.45 a barrel, the highest settlement since November 5. after trading up to $62.50 — the highest intraday trade since November 10. There was no floor trading on the New York Mercantile Exchange on Monday due to the U.S. Memorial Day holiday.
London Brent crude traded up $1.03 to settle at $61.24 a barrel.
Saudi Arabian Oil Minister Ali al-Naimi said there was already a slight “uptick” in fuel consumption.
Naimi, speaking to reporters ahead of Thursday’s OPEC meeting in Vienna, also said he hoped oil prices would hit $75 a barrel between the third and fourth quarters of this year.
U.S. gold futures ended lower as a stronger dollar prompted profit taking.
Gold for June delivery settled down $5.60 at $953.30 an ounce in New York.
Reporting by Chuck Mikolajczak, Burton Frierson and Vivianne Rodrigues in New York; Jane Merriman, Brian Gorman, Ian Chua and Jan Harvey in New York; writing by Herbert Lash; Editing by Dan Grebler