By Herbert Lash
NEW YORK (Reuters) - The dollar gained and global equity markets rallied on Wednesday, adding an upbeat note to an otherwise dismal third quarter on hope the commodities rout has run its course.
Major equity indexes around the world declined more than 10 percent over the quarter, pulled down by fears of a global economic slowdown brought on by slower growth in China, which also took its toll on commodities.
Still, analysts questioned the strength of the equity market's rally.
"People looked at yesterday's market as maybe setting a near-term bottom," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
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"Whether it can hold, that's been the problem. It's going to a test to see whether we can get one or two solid days of gains."
Major European indices rose more than 2 percent, and stocks on Wall Street jumped more than 1 percent. The FTSEuroFirst 300 index rose 2.5 percent, while MSCI's all-country world index rose 1.75 percent.
The Dow Jones industrial average rose 207.15 points, or 1.29 percent, to 16,256.28. The S&P 500 gained 27.13 points, or 1.44 percent, to 1,911.22 and the Nasdaq Composite added 80.04 points, or 1.77 percent, to 4,597.37.
The Nasdaq biotech index, which had skidded 13.5 percent over the past five days, rose 3.2 percent on Wednesday even as it posted a 19.8 loss for the quarter."You're starting to see some of the first real buying at what's really pretty dramatically reduced prices in some sectors," Meckler said.
Shares in mining and trading firm Glencore, which plummeted on Monday along with commodity prices, jumped 14.1 percent after it sought to reassure investors over its debt. Its shares had risen 17 percent on Tuesday.
The dollar got a lift from American private-sector jobs data, which bolstered bets a hike in U.S. interest rates will come in 2015, while the euro fell back on a report euro zone inflation had turned negative.
U.S. private employers added 200,000 jobs in September, beating forecasts in a report that suggests jobs growth may be sufficient for the Federal Reserve to raise interest rates later this year, according to the ADP National Employment Report.
The dollar index, a basket of major trading partner currencies, rose 0.45 percent for the day and was on track for a 0.7 percent gain for the three months ending Wednesday.
The euro fell against the dollar by 0.67 percent to $1.1170.
Euro zone prices fell by 0.1 percent on an annual basis in September after rising 0.1 percent last month, feeding speculation the European Central Bank will expand or extend its bond buying as the Fed prepares to raise rates.
U.S. government debt fell, but the market was limited as traders refrained from making major bets ahead of Friday's U.S. non-farm payrolls report for September, which may influence the Fed's timeline for hiking interest rates.
The benchmark 10-year U.S. Treasury note fell 3/32 in price to yield 2.0649 percent.
Oil prices were mixed on concerns that an escalation in the Syrian conflict after Russia started air strikes against Islamic State and the approach of a hurricane on the U.S. East Coast could curb oil production in the near future.
Brent crude oil was up 9 cents at $48.32 a barrel, heading for a 9 percent fall this month.
U.S. crude fell 10 cents to $45.13 a barrel, on course to end September down 7 percent.
Thomson Reuters Jefferies CRB Index of 19 commodity prices rose 0.24 percent.
(Additional reporting by Jamie McGeever in London, reporting by Herbert Lash; Editing by Nick Zieminski)
