By Herbert Lash
NEW YORK (Reuters) - World stock markets rose and bond prices fell on Thursday as data indicated the U.S. labor market remains resilient despite recent signs of slower growth, while earnings that are beating lowered expectations helped buoy investor sentiment.
Wall Street opened higher, following gains in Europe, where markets were lifted on growing expectations that the European Central Bank will soon cut interest rates.
A report from the U.S. 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 signs that U.S. economic activity softened in March and early April, a phenomenon that economists have dubbed the spring swoon because it has occurred 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 2/32 lower to yield 1.7097 percent.
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Recent weak global economic data, including record-high jobless figures from Spain on Thursday, has sparked expectations of more stimulus from central banks.
"Overall, investors see the potential for new measures and the distortion of global valuations as a reason to hold dogmatically onto their equities," said Guy Foster, head of portfolio strategy at Brewin Dolphin in London.
"Shares are seen as a yield asset class with risks skewed to the upside. Bonds have lost their appeal for the opposite reason."
U.S. stocks rose, boosted by gains in shares of materials companies, including iron ore producer Cliffs Natural Resources Inc,
Cliffs jumped 15 percent to $20.95 after it posted earnings late on Wednesday that were much better than analysts had estimated. The S&P 500 materials index rose 1.04 percent.
The blended per-share growth estimate for earnings is now 3.6 percent, according to Thomson Reuters, up from 1.5 percent on April 1. The estimate is about half of recent quarters.
The Dow Jones industrial average closed up 24.50 points, or 0.17 percent, at 14,700.80. The Standard & Poor's 500 Index rose 6.37 points, or 0.40 percent, to 1,585.16. The Nasdaq Composite Index gained 20.33 points, or 0.62 percent, to 3,289.99.
"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 of an ECB rate cut boosted shares and kept the euro near a three-week low to the dollar. 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 index of top European shares rose 0.74 percent to close at ,200.64, near its peak of 1,209.05 it hit in mid-March.
MSCI's all-country world equity index gained 0.64 percent to 365.22.
The dollar rose against the euro as the U.S. labor market report allayed concerns about the pace of the economic recovery, with many analysts expecting the greenback to continue to gain.
The euro last traded at $1.3006, down 0.07 percent.
Against the yen, the dollar last traded at 99.37 yen, down 0.10 percent on the day.
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 of a 0.1 percent rise, as the economy bounced back after shrinking 0.3 percent at the end of 2012.
Brent crude oil prices rose above $103 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 rose $1.68 to settle at $103.41 a barrel.
U.S. crude gained $2.21 to settle at $93.64 a barrel.
USEFUL LINKS:
U.S. jobless claims: https://bsmedia.business-standard.comlink.reuters.com/xew34t
UK quarterly GDP: http://link.reuters.com/fux64s
UK GDP growth revisions: http://link.reuters.com/sed87s
(Additional reporting by Richard Hubbard in London, Editing by Dan Grebler and Jan Paschal)