World stocks rise on upbeat U.S. GDP data; oil tumbles

By Richard Leong

NEW YORK (Reuters) - Stock prices around the world rose on Tuesday following upbeat U.S. growth data and strength in U.S. healthcare shares, while oil prices fell to the weakest level in over a week on doubts OPEC could reach an accord to reduce output.

The dollar fell against a basket of currencies on profit-taking. The dollar index had hit a near 14-year peak last week on expectations a Trump administration would result in tax cuts and a surge in federal spending to bolster the U.S. economy.

"Optimism surrounding potential fiscal stimulus and some targeted deregulation next year have lifted U.S. equity prices in recent weeks," said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

 

"Couple that with an increasingly enthusiastic consumer supported by stronger wage gains, and the economy appears well-positioned to remain on a growth path heading into 2017."

Concerns about rising government borrowing to finance fiscal stimuli, together with upbeat U.S. economic data, spurred early selling in U.S. Treasuries and other core government bonds before month-end related buying emerged, pushing their yields lower.

Gold prices fell on growing expectations of stronger global growth led by the United States and the Federal Reserve raising interest rates in response.

The Dow Jones industrial average <.DJI> was up 38.93 points, or 0.2 percent, to 19,136.83, the S&P 500 <.SPX> rose 7.68 points, or 0.35 percent, at 2,209.4 and the Nasdaq Composite <.IXIC> was up 31.73 points, or 0.59 percent, to 5,400.54.

The outlook for U.S. stocks improved after data showed the U.S. economy grew 3.2 percent in the third quarter, faster than initially thought, due to strong consumer spending and a surge in soybean exports.

UnitedHealth's 3.5 percent rise to a record high after the largest U.S. health insurer's upbeat forecast boosted the healthcare sector.

European equities ended higher, with Italian bank stocks gaining 4 percent <.FTIT8300> after Monte dei Paschi's rescue plan got off to an encouraging start. Generali's board approved a conversion of 400 million euros in Monte dei Paschi subordinated bonds into shares, according to Italian press reports.

Europe's broad FTSEurofirst 300 index <.FTEU3> finished up 0.26 percent at 1,343.68.

The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 45 nations, rose 1.24 points or 0.3 percent, to 414.88.

In addition to its bank sector, Italy was also in focus ahead of a constitutional referendum on Sunday.

Italian 10-year government yields > fell below 2 percent after Reuters reported that the European Central Bank is ready to buy more Italian bonds if there is turmoil after the constitutional referendum on Sunday.

The political risk kept the euro restrained despite the

pullback in the dollar. The single currency > was last up 0.3 percent at $1.0641.

The dollar index <.DXY> fell 0.3 percent on profit-taking, paring its month-to-date gain to 2.6 percent.

The greenback's decline was compounded by lower U.S. yields, with 10-year Treasury yield > dipping 1 basis point to 2.31 percent.

Meanwhile, oil prices fell more than 3.5 percent as OPEC members seemed to struggle with agreeing on a production cut to address a global supply overhang.

Brent crude was last down $1.81, or 3.75 percent, at $46.43 a barrel. U.S. crude was last down $1.88, or 3.99 percent, at $45.2 per barrel.

Spot gold prices > fell $3.76 or 0.32 percent, to $1,189.62 an ounce.

(Additional reporting by Tanya Agrawal, Anya George Tharakan in Bengaluru, Abhinav Ramnarayan in London, Wayne Cole in Sydney; Editing by Nick Zieminski and Dan Grebler)