World stocks gain on corporate results, surprising U.S. data

By Herbert Lash

NEW YORK (Reuters) - World equity markets advanced on Thursday as solid corporate earnings and data indicating the U.S. labor market remains resilient despite signs of slower growth buoyed optimism about the economy, an outlook that sent bond prices lower.

Wall Street followed gains in global and emerging market indices after the Labor Department said the number of Americans filing new claims for unemployment benefits fell last week by a surprisingly large 16,000.

The report appeared to counter several weeks of signals that U.S. economic activity softened in March and early April, a phenomenon that economists have dubbed the spring swoon because it has happened the past two years.

Benchmark 10-year U.S. Treasury notes fell as much as 7/32 in price in reaction to the jobless claims figures. They last traded 4/32 lower to yield 1.7217 percent.

"Investors have recently grown skittish about the U.S. economy losing steam following a run of soft data on the consumer and manufacturing," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington D.C.

United Parcel Service Inc , considered an economic bellwether, advanced 1.8 percent to $85.02 after the world's largest package-delivery company reported a quarterly profit above analysts' estimates.

The Dow initially was held back by ExxonMobil Corp and 3M Co . ExxonMobil said its quarterly profit edged up but oil and gas production fell, while 3M posted first-quarter earnings and revenue that missed expectations and it cut its 2013 profit forecast.

The Dow Jones industrial average was up 74.74 points, or 0.51 percent, at 14,751.04. The Standard & Poor's 500 Index was up 10.67 points, or 0.68 percent, at 1,589.46. The Nasdaq Composite Index was up 27.84 points, or 0.85 percent, at 3,297.49.

"Investors coming into this earnings season were quite fearful, so even modestly positive news becomes great news and that is what we've experienced for the last several days," said Lawrence Creatura, an equity portfolio manager at Federated Investors in Rochester, New York.

"It's probably a little early in the earnings season to talk about aggregate results but it's important to recognize that earnings are growing and so higher prices are deserved," Creatura said.

Expectations the European Central Bank will cut interest rates have lifted European shares toward 2013 highs over the past week and kept the euro near a three-week low to the dollar. Senior sources involved in the deliberations have told Reuters that momentum is building for monetary action to help the recession-hit euro zone.

The FTSE Eurofirst 300 index of top European shares was rose 0.66 percent to close at a provisional 1,199.71 points, near its peak of 1,209.05 it hit in mid-March.

MSCI's all-country world equity index gained 0.8 percent to a 365.68.

The dollar pared losses versus the Japanese yen and euro after the U.S. report on unemployment benefit claims. The dollar last traded at 99.37 yen, down 0.1 percent on the day.

The euro last traded at $1.3012, down 0.02 percent.

Sterling jumped to a two-month high against the dollar and a three-month peak against the euro after data showed the UK economy comfortably avoided slipping back into recession in the first quarter.

UK gross domestic product rose 0.3 percent in the three months to March, well above forecasts for a 0.1 percent rise, as the economy bounced back after shrinking 0.3 percent at the end of 2012.

Brent crude oil prices held above $102 a barrel, underpinned by a weaker dollar, while U.S. crude's discount to Brent fell below $10 for the first time since June 2012.

Brent crude was up 67 cents at $102.40 a barrel.

U.S. crude was up 62 cents at $92.05 a barrel.

(Additional reporting by Richard Hubbard in London; Editing by Dan Grebler)