Global shares, dollar rebound as U.S. data buoys markets

By Herbert Lash

NEW YORK (Reuters) - The dollar recovered from early losses and global equity markets rose on Tuesday after better-than-expected government reports on the U.S. economy and strong consumer confidence data gave investors a reprieve about worries over Federal Reserve policy.

Orders for durable goods rose more than expected in May and a gauge of planned business spending gained for a third straight month, while existing single-family home prices posted their biggest rise in seven years in April.

In another better-than-expected report, the Conference Board's U.S. consumer confidence index rose in June, to 81.4 from a downwardly revised 74.3 in the prior month, the private business research group reported.

At first blush, the data would be seen as bullish, as the economy is improving. But that suggests the Fed can move forward with plans to ease its bond-buying program, and fears of such a move have led bond yields to jump and stocks to slide in recent days.

"The market trend has turned to the downside. It is now easier to sell rallies than to buy dips, so strategies have flipped," said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management.

Global markets tracked by MSCI's all-country world equity index were up 0.88 percent, while the FTSEurofirst 300 index of leading European companies rose 1.45 percent to close at 1,130.37, recovering some of the 5.5 percent it lost in the previous three trading days.

The Dow Jones industrial average was up 113.88 points, or 0.78 percent, at 14,773.44. The Standard & Poor's 500 Index was up 15.53 points, or 0.99 percent, at 1,588.62. The Nasdaq Composite Index was up 24.78 points, or 0.75 percent, at 3,345.53.

The pause in the market's recent rout began when two Fed policymakers on Monday downplayed the notion of an imminent end to the central bank's money-printing and said the market reaction was not yet a cause for concern.

Asian markets then capped a day of wild swings, during which Chinese stocks plunged to their lowest since the global financial crisis began, with a late rally on hopes authorities in China would step in to prevent a crisis.

China's central bank fueled the talk at a news briefing where it sought to allay fears of a credit squeeze by committing to guide interest rates to "reasonable" levels after they had been allowed to spike over the past week.

The dollar extended gains against the yen and euro on Tuesday after data showed sales of new U.S. single-family homes rose to their highest in nearly five years in May, confirming the housing market's strengthening tone.

The dollar rose against the yen to 97.74 yen from about 97.61 yen before the data, up 0.02 percent on the day.

The euro fell to the session low of $1.3066, where it traded before the data. It was trading at 1.3093, down 0.18 percent.

Prices of U.S. Treasuries edged down slightly in choppy trade, while German Bund futures pared their early gains on news of the manufacturing data.

The benchmark 10-year U.S. Treasury note was down 11/32 in price to yield 2.5857 percent.

Bund futures traded at 140.50, up 19 ticks from Monday's close, having risen as high as 141.01 before the data.

Crude oil prices were slightly higher in lackluster trading, with gains kept in check by a stronger U.S. dollar and less chance of reduced U.S. imports from Canada as part of a Canadian pipeline came back online.

The crude market traded sideways after last week's sharp selloff on news about the Fed and its monetary stimulus program.

Brent crude rose 10 cents to settle at $101.26 a barrel. U.S. oil rose 14 cents to settle at $95.32.

"Okay so we've shed $5, now do we see a reason to recoup that? It's a soft market, it's not a market that's getting a lot of information," said Sarah Emerson, managing principal of energy research and forecasting firm ESAI Energy in Wakefield, Massachusetts.

(Additional reporting by Richard Hubbard in London, editing by Dan Grebler)