US Stocks Rise Most This Year on Economy; Euro Gains - Bloomberg

U.S stocks rallied, sending the Dow Jones Industrial Average up the most in three months, as oil retreated and reports signaled the global economy is strengthening. The euro climbed as the European Central Bank said an interest-rate increase may be needed to fight inflation.

The Dow climbed 204.91 points, or 1.7 percent, to 12,271.71 at 3:19 p.m. in New York and the MSCI Emerging Markets Index increased for a fifth day, the longest rally in two months. The Stoxx Europe 600 Index pared gains amid concern borrowing costs will rise. The euro appreciated 0.5 percent against the dollar and German two-year note yields jumped 23 basis points. Oil lost 0.3 percent to $101.91 a barrel, falling from its highest price in more than two years. Treasuries and the dollar fell.

U.S. equities advanced for the fourth time in five days after jobless claims unexpectedly fell, underscoring the Federal Reserve’s assessment that the labor market is improving. Other reports showed American service industries expanded at the fastest pace in five years, retail sales topped estimates and South Korean industrial output grew. ECB President Jean-Claude Trichet said policy makers must exercise “strong vigilance” as inflation risks increase.

“The stock market has the best of all worlds,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees more than $85 billion. “The numbers we’ve seen -- employment, ISM, retail sales --argue that concern about a slowdown due to rising energy costs may be overstated.” more ...