S&P 500 nears intraday record, commodities retreat

By Wanfeng Zhou

NEW YORK (Reuters) - Major stock markets rose on Tuesday, with the U.S. S&P 500 index nearing its all-time intraday high, while the euro slipped against the dollar after data showed manufacturing across the euro zone fell contracted further last month.

Gold fell to a 2-1/2 week low, pressured by a strengthening dollar and as investors moved away from safe havens in favor of stocks. Other commodities retreated, including a fall in copper to a seven-month low on global growth worries.

Investors awaited key events later this week. The Bank of Japan and the European Central Bank both hold policy meetings this week. On Friday, the U.S. government will release the all-important payrolls report for March.

On Wall Street, stocks rebounded from the previous session, as healthcare shares surged on prospects of a boost to earnings. The group gained as the U.S. government dropped plans to decrease payments for private Medicare Advantage insurers and instead to raise them by 3.3 percent.

"Given how lean these companies are, this news is pretty significant and could mean a 10 to 15 percent increase in earnings," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

The benchmark S&P 500 index last week set an all-time closing high, but has thus far been unable to reach its intraday record of 1,576.09, an important psychological level for investors.

The Dow Jones industrial average gained 100.61 points, or 0.69 percent, to 14,673.46. The Standard & Poor's 500 Index rose 10.72 points, or 0.69 percent, to 1,572.89. The Nasdaq Composite Index added 26.81 points, or 0.83 percent, to 3,265.98.

European shares rallied after a two-week slide as M&A activity helped lift sentiment. Europe's FTSEurofirst 300 index gained 1.3 percent to 1204.49 points.

The broad MSCI world equity index rose 0.6 percent to 360.49 points.

The euro fell 0.1 percent to $1.2836 after Markit's Eurozone Manufacturing PMI fell in March to 46.8 from 47.9 in February, extending to a 20th month its run below the 50 mark that separates growth and contraction.

The data boosted expectations European Central Bank President Mario Draghi would strike a more dovish tone at Thursday's monetary policy outlook meeting and could provide hints about a possible rate cut.

"We expect euro zone fundamentals to deteriorate further. This, combined with outflow pressures, should keep the euro's downward trend intact," said Camilla Sutton, chief currency strategist, at Scotiabank in Toronto.

The dollar rose 0.3 percent to 93.52 yen. The BoJ meets on April 3-4 and is widely expected to ramp up its bond buying and to extend the maturities of the bonds it purchases under new Governor Haruhiko Kuroda.

COMMODITIES RETREAT

Spot gold hit an intraday high of $1,603.60 an ounce, before falling to $1,583 an ounce, down from $1,598.40 on Monday.

"You have a rally in equities and strength in the dollar and that seems to be the focus right now, which is putting gold in the back seat," HSBC analyst Howard Wen said.

Benchmark copper on the London Metal Exchange (LME) hit a session low of $7,440 a tonne, its weakest since August 21, and was last around $7,456 a tonne. Disappointing manufacturing data from the euro zone, the United States and China stoked demand worries for the metal used in power and construction.

Silver also dipped to its lowest since mid-August at $27.53 an ounce, while platinum and palladium lost more than 1 percent.

Oil prices declined as ample supplies and concerns over the pace of economic recoveries in the United States and Europe outweighed the prospect of stronger demand in Asia.

Brent slid 43 cents to $110.65 a barrel. U.S. crude was down 57 cents to $96.51.

Safe-haven government debt prices also declined. Benchmark 10-year Treasury notes were down 8/32, their yields rising to 1.8624 percent from 1.84 percent on Monday. German Bund futures also fell.

(Additional reporting by Ryan Vlastelica in New York and Silvia Antonioli, Clara Denina; Editing by Chizu Nomiyama and Kenneth Barry)