Global shares gain on U.S. jobs data, euro up after ECB

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose on Thursday after an encouraging U.S. weekly labor market report indicated a steadily improving economy, while the euro strengthened after the European Central Bank left its benchmark interest rate unchanged.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, another sign in recent data that the labor market is picking up.

On Wall Street, U.S. stocks rose on the labor report, but European shares pared their gains when ECB President Mario Draghi was non-committal as to whether he thought equity markets were fairly priced at current lofty levels.

The euro rallied more than 1 percent as Draghi gave no hints of further easing in euro-zone interest rates after the ECB left its benchmark rate unchanged at 0.75 percent.

A growing minority of respondents in a Reuters poll - 22 out of 76 - expect the ECB to eventually cut its main refinancing rate to a record low of 0.5 percent.

The Dow hit an intraday record for a third session in a row, climbing as high as 14,354.69 after reaching uncharted territory on Tuesday. The broader S&P 500 remains more than 1 percent below its record close and intraday high set in October 2007.

The number of Americans filing initial claims for unemployment benefits unexpectedly fell to a seasonally adjusted 340,000 last week.

"It's certainly welcoming to the market and it's once again supporting the thought that the economic recovery is strengthening despite the stalemate in budget talks, etc," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. LLC in New York.

The Dow Jones industrial average was up 38.00 points, or 0.27 percent, at 14,333.24. The Standard & Poor's 500 Index was up 3.73 points, or 0.24 percent, at 1,545.19. The Nasdaq Composite Index was up 10.81 points, or 0.33 percent, at 3,233.18.

The equity rally's sharp advance has raised concerns on both sides of the Atlantic. The Dow is up more than 9 percent so far this year, while the S&P 500 is up more than 8 percent.

"Equity markets have had a pretty significant advance over the past several months since bottoming in November. Despite generally positive market internals, there's some worry about jumping into the market at these levels," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

The Dow has climbed 15 percent from its November lows, while the FTSEurofirst-300 Index of top European shares has gained 11 percent over that span.

The Russell 2000 Index, which measures the performance of 2,000 U.S. small-cap companies, hit an intraday record high in Thursday's session. The Russell 1000 and the Russell 3000 also climbed to record intraday highs.

European shares ended slightly lower on Thursday, held back by a post-results slump for British insurer Aviva . Some said they expected the pullback to continue in the short term.

The FTSEurofirst 300 index of leading regional shares, dipped 0.07 percent to close at 1,185.17 after hitting a 4-1/2-year intraday high on Wednesday.

Five leading stock indices, for Britain, Germany, France, Italy and Spain, all ended the day higher.

MSCI's all-country world stock index eased from a new intraday high for the year of 359.47, to trade up 0.17 percent for the day.

The euro was up 1.1 percent at $1.3106 after hitting a session peak of $1.3116, a five-day high.

The ECB and the Bank of England kept interest rates on hold, as expected.

Prices for U.S. Treasuries slid as a second straight day of better-than-expected labor market data boosted appetite for riskier assets.

Benchmark 10-year Treasury notes fell 16/32 in price to yield 1.993 percent.

Oil hovered near break-even at about $111 a barrel as the ECB gave no strong hint about monetary policy easing in the months ahead and on the better-than-expected U.S. jobs data.

Brent crude rose 9 cents to settle at $111.15 a barrel. U.S. crude futures gained $1.13 to settle at $91.56.

(Additional reporting by Richard Hubbard in London; Reporting by Herbert Lash; Editing by James Dalgleish and Jan Paschal)