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GLOBAL MARKETS-Oil and copper rally, lift stocks

Published 05/18/2011, 03:21 PM
Updated 05/18/2011, 03:24 PM

* CRB commodities index on track for best day in 2 months

* Oil, copper rebound from lows

* Wall St's stocks buoyed by commodities, Dell

* European debt woes still in focus; euro wobbly (Updates prices, adds Fed minutes, changes comment)

By Rodrigo Campos

NEW YORK, May 18 (Reuters) - An unexpected drop in U.S. oil supplies boosted crude prices as commodities rallied from steep losses on Wednesday, helping lift global stocks after five days of losses.

On Wall Street, stocks were led by gains in energy and basic materials shares, while a jump of almost 6 percent in the stock of computer maker Dell boosted the technology sector.

Oil prices rose after a weekly government report showed a surprising decline, albeit modest, in U.S. crude stockpiles. Commodities rallied after the data spurred views that a recent sharp selling binge, which pushed the price of oil sold in the United States down more than 15 percent this month, had gone too far.

U.S. crude rose more than 3 percent to settle back above $100 a barrel for the first time this week. Brent crude gained 2 percent to settle at $112.30 a barrel.

U.S. crude is still down around 12 percent this month.

"There is a sense that perhaps the selling in the energy markets was overdone," said Phil Flynn, an analyst at PFGBest Research in Chicago.

Copper jumped 3.4 percent to a two-week high, but doubts about short-term fundamentals were expected to cap prices. The Reuters/Jefferies CRB commodities index <.CRB> rose 2.3 percent, its largest daily gain in two months.

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A stronger dollar and renewed concerns about global economic growth have been cited for plummeting commodity prices in the first two weeks of May.

STOCKS RISE, EURO WOBBLES

U.S. stocks rose, led by energy shares as oil prices rebounded, while strong results and an encouraging outlook from the world's No. 2 PC maker Dell Inc lifted technology shares.

"The rally has been led by the raw materials, which is linked to a rebound in some of the commodity prices," said Nick Kalivas, an analyst at MF Global in Chicago. Dell's earnings "were strong and breathed some life back into technology."

The Dow Jones industrial average <.DJI> rose 70.31 points, or 0.56 percent, to 12,549.89. The Standard & Poor's 500 Index <.SPX> gained 10.01 points, or 0.75 percent, to 1,338.99. The Nasdaq Composite Index <.IXIC> added 29.75 points, or 1.07 percent, to 2,812.96.

World stocks as measured by MSCI <.MIWD00000PUS> jumped 0.8 percent, bouncing off five days of losses that took the index down on Tuesday to its lowest close since April 18.

Europe's FTSEurofirst 300 <.FTEU3> rose 0.4 percent to close at 1,130.89.

The euro hovered near break even against the dollar in volatile trade. Firmer stocks and commodities gave a floor to the single currency, but the near-term outlook remained overcast as Greece's debt situation was still largely unresolved.

Most Federal Reserve officials prefer to raise benchmark interest rates before selling assets when the time comes to tighten policy, minutes of their April meeting showed.

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U.S. policy makers said discussion of the removal of monetary stimulus should not be seen as an indication it will happen soon.

The euro edged 0.1 percent lower to $1.4222

Yields in a German bond auction were lower and those at a Portuguese sale were higher than in previous bidding, reflecting the perceived safety of bonds from the euro zone's strongest economy while countries on the bloc's periphery struggle. (Reporting by Rodrigo Campos; Additional reporting by Edward Krudy, Robert Gibbons, Gene Ramos and Gertrude Chavez-Dreyfuss; Editing by Jan Paschal)

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