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GLOBAL MARKETS-Oil and copper rally lifts global stocks

Published 05/18/2011, 04:45 PM
Updated 05/18/2011, 04:48 PM

* CRB commodities index posts best day in 2 months

* Wall Street stocks buoyed by commodities, Dell

* European debt woes still in focus; euro wobbly (Updates prices, adds U.S. market close, Nikkei futures)

By Rodrigo Campos

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

Wall Street stocks posted their best day in three weeks, led by gains in energy and basic materials shares, while a more than 5 percent jump in the stock of computer maker Dell boosted the technology sector.

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

U.S. crude rose 4 percent before paring gains, up more than 2.5 percent and just shy of $100 a barrel. Brent crude gained 1.9 percent to at $112.05 a barrel.

U.S. crude is still down 12.5 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 were led by energy shares and an encouraging outlook from the world's No. 2 PC maker, Dell Inc .

"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 80.60 points, or 0.65 percent, to 12,560.18. The Standard & Poor's 500 <.SPX> gained 11.70 points, or 0.88 percent, to 1,340.68. The Nasdaq Composite <.IXIC> added 31.79 points, or 1.14 percent, to 2,815.00.

The broad S&P 500 <.SPX> posted its largest daily percentage gain since April 26.

World stocks as measured by MSCI <.MIWD00000PUS> jumped 0.9 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 and U.S. dollar-denominated Nikkei futures gained 1 percent.

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. policymakers said discussion of the removal of monetary stimulus should not be seen as an indication it will happen soon.

The euro was mostly unchanged at $1.4239

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