Stocks extend rally on U.S. jobs data; dollar falls

Mon Oct 6, 2014 4:44pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets extended a rally on Monday that drew strength from a U.S. jobs report last week that bolstered confidence in the American economy, but the dollar fell sharply and stocks on Wall Street eased as volatility picked up.

Brazil's benchmark stock index .BVSP jumped almost 5 percent after a pro-business candidate surged to a strong finish in Sunday's presidential election, setting the stage for a likely tight run-off with leftist President Dilma Rousseff.

Friday's U.S. non-farm payrolls report fueled speculation that the Federal Reserve will hike interest rates by mid-2015, leading the dollar to notch its 12th straight week of gains, the longest weekly winning streak in more than 40 years.

But the dollar index dropped 1.1 percent on Monday to post its biggest fall by percentage since July 2013.

Treasury prices rose and gold climbed 1.4 percent for its biggest one-day gain in two months as the dollar's sharp fall sparked fresh physical demand and short-covering after bullion hit a 15-month low.

U.S. COMEX gold futures GCZ4 settled up $14.40 at $1,207.30 an ounce in heavy trading.

"Volatility has picked up some. You have people who got in at a lower cost last week and took advantage of the up move to get out and it's left some investors questioning whether that rally is here to stay," Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey, said of the day's equities moves.

The CBOE Volatility index rose 1.72 points from trough to peak, almost double its average of 1.06 points over the past 250 sessions. The VIX has surpassed the year-long average in nine of the past 10 sessions.   Continued...

Traders work on the floor of the New York Stock Exchange October 3, 2014. REUTERS/Brendan McDermid