Equity markets up, dollar rises to seven-month high

NEW YORK: Global equity markets and the dollar rose yesterday, with the iconic Dow set to extend its winning streak to 10 days, after more improving signs of a labor market recovery underpinned sentiment the US economy is gaining traction.
The dollar rose to a seven-month high against a basket of currencies and a three-month peak versus the euro, lifted by data showing the current account narrowing in the fourth quarter and other encouraging economic reports over the past week.
Wall Street followed gains in Europe that pushed regional shares to a fresh 4-1/2 year high, after the Labor Department said initial claims for state unemployment benefits unexpectedly fell in the latest week.
The four-week moving average for new claims, a better measure of labor market trends, fell to 346,750, the lowest level in five years. The decline suggested a firming in underlying labor market conditions.
"Every week that claims stay down, it confirms it's not an anomaly, and this is pretty important," said Jack De Gan, chief investment officer at Harbor Advisory Corp. in Portsmouth, New Hampshire.
The downward trend in jobless claims is "one of the reasons the market has been strong year to date," he said, adding "you don't string together more than eight or nine days very often."
The S&P 500 early in the session was about 5 points away from an all-time closing high of 1,565.15. The Dow has risen for nine straight days, a streak not seen since late 1996.
The Dow Jones Industrial Average was up 58.22 points, or 0.40 percent, at 14,513.50. The Standard & Poor's 500 Index was up 5.36 points, or 0.34 percent, at 1,559.88. The Nasdaq Composite Index was up 9.92 points, or 0.31 percent, at 3,255.03.
In Europe, the European FTSEurofirst 300 of leading regional shares was at its highest level since mid-2008, up 0.85 percent on the day.
The recent stellar run by global stock markets is due to improving growth in key economies such as the United States and the ongoing commitment by major central banks to keep stimulus in place as long as needed, analysts said.
"The current rally is due to the cyclical expectations for the US economy as it recovers," said Didier Duret, chief investment officer at ABN Amro.
"The better the US performs the bigger the hope that we will see some spill over into Europe... We are overweight in equities and we love it," he added.
The glow of the US data also helped the dollar climb to a new seven-month high of 83.166 as gains across the board helped push it up against a basket of currencies. The dollar index later eased about 0.04 percent to 82.852.
The euro rebounded to trade flat at $1.2960. The single currency has shed 6 percent from a peak early last month.
Oil rose above $109 a barrel, rebounding after four days of losses, although a subdued outlook for demand growth and easing supply concerns limited the gains. The US jobs data gave oil a lift.
Brent crude for April gained $ 1.25 to $ 109.77 a barrel. US oil added 19 cents to $ 92.71.
US Treasuries extended price losses on the jobless report.
The benchmark 10-year US Treasury note was down 8/32 in price to yield 2.0489 percent.
FROM: REUTERS