US economic data pushes dollar, global stocks; Chinese demand boosts oil

This comes a day after Fed Chair Janet Yellen signalled a less aggressive rise in interest rates

Upbeat data lifted the dollar and sent world shares to a fourth all-time high in less than a month on Thursday, a day after Federal Reserve Chair Janet Yellen signalled that a rise in interest rates would be less aggressive than had been expected.

Oil prices gained as evidence of stronger demand in China offset reports of higher production by key Organisation of the Petroleum Exporting Countries (Opec) exporters in a report by the International Energy Agency (IEA).

Stocks on Wall Street climbed, ahead of Yellen's second day of testimony after her remarks on Wednesday suggested a more gradual tightening of monetary policy than expected, which sparked a rally in global equity markets.

The US economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation may leave the central bank with less leeway, Yellen told a House committee on Wednesday.

Sentiment was boosted after China reported upbeat data on exports and imports for June, the latest sign that global trade is finding some traction again. The data pushed Asian shares up more than 1 per cent and lifted MSCI's 47-country gauge of global equity markets to a fresh record high with a gain of 0.25 per cent.

The pan-European FTSEurofirst 300 index rose 0.27 per cent to close at a preliminary 1,518.69.

The Dow Jones Industrial Average rose 18.24 points, or 0.08 per cent, to 21,550.38. The S&P 500 gained 2.82 points, or 0.12 per cent, to 2,446.07 and the Nasdaq Composite added 2.29 points, or 0.04 per cent, to 6,263.46.

Oil gains

Encouraging US economic data supported the dollar. The number of Americans filing for unemployment benefits fell last week for the first time in a month and producer prices unexpectedly rose in June. The data likely will keep the Fed on track for a third interest rate increase this year.

"We are seeing the dollar do a little bit better this morning, particularly following the producer price index figure," said Sireen Harajli, FX strategist at Mizuho in New York.

"Yesterday, Yellen's comments were perceived as more dovish by the market," she said.

Yellen returned to Capitol Hill on Thursday to testify before the Senate Banking Committee and investors are also focused on US consumer price index numbers due out on Friday.

Oil prices rose after dropping in recent weeks to levels not seen since the end of last year as investors lost faith in a deal between Opec and non-Opec producers to reduce output.

US shale oil production also has risen sharply.

Brent crude was up 71 cents to $48.45 a barrel. US light crude was 69 cents higher at $46.18.

US Treasury yields rose after falling for three straight days, tracking gains in German bond yields with solid US economic data supporting their trend higher.

Benchmark 10-year US Treasury notes fell 9/32 in price to yield 2.3569 per cent. The German 10-year Bund was up 2 basis points to 0.533 per cent.