GLOBAL MARKETS

Stocks rally, S&P 500 crosses 3,000 barrier; oil gains

NEW YORK/LONDON - Global equities and oil rose on Tuesday as China's promise of more stimulus and prospects of a world economic recovery cheered investors, who set aside concerns about tense rhetoric between Washington and Beijing.

The euro got a boost from a weaker dollar as rising optimism about the easing of coronavirus pandemic lockdowns supported riskier currencies and sent safe-haven gold lower.

Crude prices rose on growing confidence that producers are following through on commitments to cut supplies and as fuel demand has picked up.

US stocks pared gains after President Donald Trump's economic adviser, Larry Kudlow, said China was making "a big mistake" with planned national security legislation on Hong Kong and pledged Washington would pay expenses of US firms that wanted to shift operations from the city or China.

White House spokeswoman Kayleigh McEnany said Trump finds it hard to see "how Hong Kong can remain a financial hub if China takes over."

MSCI's gauge of stock performance in 49 countries rose more than 2% at one point, as did its emerging markets index. The S&P 500 climbed past the 3,000 mark for the first time since March 5, up 37% from March lows but still off about 11% from its all-time high in February, and it closed under 3,000.

Europe was powered by a 6.9% surge in travel and leisure stocks. On Wall Street, shares of American Airlines and United Airlines Holdings rose more than 15% and U.S.-listed cruise ship operators jumped about the same.

The major boost for investor sentiment is the reopening of the U.S. and global economies, said Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group Inc in New York.

"Reports of economic activity, while still terrible compared to three months ago, have begun to get less bad as compared to the prior month," Benowitz said.

Spain said quarantine-free tourism would resume next month and Germany edged toward a 9 billion-euro bailout of airline Lufthansa.

Spain's Melia Hotels International SA rose 13.6% and France's Accor SA 11.3%, the biggest percentage gainers on the Spanish and French bourses. Norwegian Cruise Line Holdings Ltd and Royal Caribbean Cruises Ltd were among the top four percentage gainers on the S&P 500.

But the travel industry remained vulnerable. Latin America's largest airline, LATAM Airlines Group, and its affiliates in Chile, Peru, Colombia and Ecuador filed for bankruptcy protection in the United States.

MSCI's all-country world index US gained 1.6%, and the pan-European STOXX 600 index 1.1%.

The Dow Jones Industrial Average rose 529.95 points, or 2.17%, to 24,995.11. The S&P 500 gained 36.32 points, or 1.23%, to 2,991.77 and the Nasdaq Composite added 15.63 points, or 0.17%, to 9,340.22.

Crude prices were buoyed by Russia's saying its oil output had dropped close to its target of 8.5 million barrels per day for May and June under the supply deal reached by major producers.

Brent futures rose 64 cents to settle at $36.17 a barrel, while US crude settled up $1.10 at $34.35.

China's central bank said it would keep pushing to lower interest rates on loans, helping offset tensions between Beijing and Washington over trade, the coronavirus and Hong Kong.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 1.7% overnight, with South Korea up 1.75% and Chinese blue chips 1.1% higher.

The dollar index fell 0.774%, with the euro up 0.81% to $1.0987. The Japanese yen strengthened 0.20% versus the greenback at 107.50 per dollar.

Benchmark US 10-year Treasury notes rose 3.4 basis points to yield 0.6932%.

US gold futures settled down 1.7% at $1,705.60 an ounce. Spot gold dropped 1.1% to $1,711.12. -- Reuters