Data supports stocks, dollar; oil up but off for week

By Rodrigo Campos

NEW YORK (Reuters) - Stocks in major world markets rose to a two-month high on Friday and the dollar ticked up, boosted by views that the European Central Bank may provide more stimulus to the euro zone economy.

Oil prices rose nearly 2 percent as traders covered short positions after four days of sharp losses and the U.S. oil rig count fell for a seventh straight week.

On Wall Street, the benchmark S&P 500 index was on track for a third week of gains, a streak not seen since May. General Electric helped buoy the index for the day with a 1.3 percent gain after reporting results, but other industrials like Honeywell fell as did stocks in the energy sector.

 

"Right now, the trade is a risk relief rally, people buying back the risk they sold earlier in the month," said Paul Zemsky, chief investment officer, multi-asset strategies and solutions at Voya Investment Management in New York.

On earnings, Zemsky said "expectations have been depressed so far it seems almost certain we'll have a positive surprise."

The Dow Jones industrial average <.DJI> rose 32.01 points, or 0.19 percent, to 17,173.76, the S&P 500 <.SPX> gained 4.66 points, or 0.23 percent, to 2,028.52 and the Nasdaq Composite <.IXIC> added 2.17 points, or 0.04 percent, to 4,872.27.

The pan-European FTSEurofirst 300 index <.FTEU3> closed up 0.7 percent. For the week, the index was little changed, after a 4.4 percent advance the preceding week.

An MSCI gauge of stocks in top world markets <.MIWD00000PUS> ticked up 0.3 percent, on track to close at its highest since mid-August.

EURO SOFT, YEN PARES GAINS

Annual inflation in the euro zone turned negative in September due to sharply lower energy prices, maintaining pressure on the ECB to increase its asset purchases to boost prices.

The euro > fell 0.1 percent to $1.1370 and was little changed for the week.

"In the near term, the dollar could gain further against the euro as there's more speculation about more (quantitative easing) from the ECB," said Lee Ferridge, State Street Global Markets' head of macro strategy, North America, in Boston.

Against the yen >, the greenback advanced 0.45 percent to buy 119.41, though it still remained the strongest week for the yen in the past six.

The dollar index <.DXY>, which values the greenback against a basket of six major counterparts, was up 0.2 percent.

Oil prices rose, with traders closing short positions after a sharp drop this week and with help of a further decline in the U.S. rig count.

The December contract for Brent, the new front month for the global crude benchmark, was up 1.5 percent from its Thursday settlement, trading above $50 a barrel. U.S. crude's front-month was up 2.1 percent at $47.36 per barrel.

U.S. 30-year Treasury yields dipped on views the outlook for inflation appeared weak, while short-dated yields edged up.

Benchmark 10-year Treasury notes > were down 3/32 in price to yield 2.0316 percent, from 2.021 percent late Thursday.

London copper fell 0.4 percent and spot gold > was down 0.2 percent.

(Additional reporting by Barani Krishnan, Richard Leong and Sam Forgione; Editing by Bernadette Baum and Meredith Mazzilli)