By Herbert Lash
NEW YORK (Reuters) - The dollar snapped a four-day losing streak on Thursday and global equity markets jumped at the start of 2020 with a shot of Chinese stimulus, ensuring last year's record-breaking rally remained intact.
Gold climbed to a three-month peak while yields on U.S. Treasuries and Germany's 10-year bond tumbled on optimism about the world economy after positive Chinese manufacturing data.
News that China's central bank was freeing another 800 billion yuan ($115 billion) to prop up a slowing economy added to optimism, already fueled by easing U.S.-Sino trade tensions.
China's factory activity expanded at a slower clip in December, pulling back from a three-year high the previous month as new orders softened, but production continued to grow at a solid pace and business confidence shot up.
The Caixin/Markit Manufacturing Purchasing Managers' Index for December eased to 51.5 from 51.8 in November, but it remained above the 50-mark that separates expansion from contraction for the fifth straight month.
"It still feels like this continuation of the surge that happened toward year-end in 2019," said Ken Polcari, senior market strategist at SlateStone Wealth LLC in Jupiter, Florida.
"You did have some good Chinese data that came out overnight, a positive manufacturing PMI, which is very expansionary and helping fuel the rally."
MSCI's gauge of stocks across the globe gained 0.47%, while the pan-European STOXX 600 index rose 1.04%.
The double lift of Chinese news helped Europe's main markets in London, Frankfurt and Paris jump 0.88% to 1.4%, outpacing overnight gains in Asia and setting them on course for their best opening day of a year since 2013.
The number of Americans filing claims for jobless benefits edged lower last week, a positive signal for the U.S. labor market amid recent signs new claims may be trending slightly higher.
Initial claims for unemployment benefits decreased 2,000 to a seasonally adjusted 222,000 for the week ended Dec. 28, the Labor Department said. Economists polled by Reuters had expected 225,000 new claims last week.
On Wall Street, the Dow Jones Industrial Average rose 167.86 points, or 0.59%, to 28,706.3. The S&P 500 gained 10.87 points, or 0.34%, to 3,241.65 and the Nasdaq Composite added 59.60 points, or 0.66%, to 9,032.20.
Emerging market stocks rose 1.06% while MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.88% higher.
China's blue-chip CSI300 index, one of the world's best performers last year, rose 1.4%, reaching its highest since Feb. 7, 2018. Hong Kong's Hang Seng added 1.25%.
Alibaba Group Holding Ltd rose 3.4% on news that China's Ant Financial, an affiliate of the e-commerce giant, has joined the race for a digital banking license in Singapore, the company said in a statement.
The dollar recovered from a six-month low after a downbeat December left an index that tracks the greenback versus a basket of six major trading currencies almost flat at the end of 2019.
The dollar index rose 0.3%, with the euro down 0.23% to $1.1184. The Japanese yen strengthened 0.36% versus the greenback at 108.32 per dollar.
Sterling was on track for its biggest daily loss in two weeks as euphoria after last month's UK election gave way to anxiety over the risk of a no-deal Brexit at the end of 2020.
The pound was last trading at $1.3157, down 0.73% on the day.
Benchmark 10-year notes rose 12/32 in price to yield 1.8683%.
Germany's 10-year bond yield briefly hit -0.16% on optimism better U.S.-China trade relations will spur global growth, denting safe-haven assets.
The yield on the bund, a benchmark for European lending, soon slid to -0.23%.
Oil prices steadied after early gains as signs of improving U.S.-China trade relations eased demand concerns and rising tensions in the Middle East provided support.
Brent crude futures rose 7 cents to $66.07 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 8 cents to $61.14 a barrel.
Spot gold added 0.8% to $1,528.62 an ounce, having notched a three-month high of $1,530.60 earlier in the session.
(Reporting by Herbert Lash; Editing by Dan Grebler)
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Updated Date: Jan 03, 2020 00:07:48 IST