NEW YORK (Reuters) - The dollar and most global equity markets on Thursday snapped three days of losses after strong U.S. retail sales and declining jobless claims signaled the U.S. economy could weather weak oil prices and a likely interest rate hike next year.
U.S. crude futures fell below $60 a barrel for the first time in five years, breaching a key psychological support level, as oil extended this week’s losses on oversupply concerns.
Stocks and the dollar gained after data showed U.S. consumer spending advanced at a brisk clip in November as lower gasoline prices gave holiday shopping a boost and offered the latest sign the American economy is still gathering momentum.
“We are starting to get some metrics around the energy and we are seeing that one ‘X’ factor of, ‘Will consumers spend this extra money?’” said Sean McCarthy, regional chief investment officer for Wells Fargo Private Bank in Scottsdale, Arizona. “And in the holiday season, they are (spending), and more so.”
The dollar rose 0.96 percent to 118.94 yen JPY=, reversing a three-day drop that started after the greenback rose to a seven-year peak against the Japanese currency on Monday.
The euro EUR= fell 0.4 percent to $1.2392.
The S&P 500 .SPX equities index had shed 2.4 percent over the past three sessions, the benchmark’s worst run in two months, as tumbling oil prices weighed on the energy .SPNY sector.
But crude’s weakness helped holiday spending, and retail sales data for November beat expectations. The S&P retail index .SPXRT rose 1.01 percent, lifted by a 1.34 percent gain by Home Depot (HD.N) to $100.27.
MSCI’s all-country world stock index .MIWD00000PUS gave back some gains late in the session to trade just off break-even, down 0.06 percent at 414.53, while the FTSEurofirst 300 .FTEU3 index of top European shares closed up 0.02 percent at 1,359.11.
Most euro zone stock indexes turned higher in late trading in response to the U.S. data. Worries about next week’s Greek presidential elections and a slump in commodity prices had pushed regional shares lower over the past three days.
On Wall Street, the Dow Jones industrial average .DJI rose 63.19 points, or 0.36 percent, to 17,596.34. The S&P 500 .SPX gained 9.19 points, or 0.45 percent, to 2,035.33, and the Nasdaq Composite .IXIC added 24.14 points, or 0.52 percent, to 4,708.16.
Brent crude fell below $64 a barrel on signs that ample supplies will be even more plentiful in 2015, following an Organization of Petroleum Exporting Countries forecast.
Prices fell Wednesday after U.S. crude inventories unexpectedly rose and OPEC’s most influential voice, Saudi Arabia’s oil minister, shrugged off the need for an output cut.
North Sea Brent crude LCOc1 fell 56 cents to settle at $63.68 a barrel. U.S. crude CLc1 fell 99 cents to settle at $59.95 a barrel.
Intermediate-dated U.S. Treasuries weakened and the yield curve neared its flattest in six years after the U.S. economic data.
Three-year notes US3YT=RR fell 3/32 in price to yield 1.0530 percent, up from 1.02 percent late on Wednesday.
Benchmark 10-year notes US10YT=RR fell 2/32 in price to yield 2.1760 percent.
British 20- and 30-year government bond yields fell to record lows as euro zone debt rallied on bets the European Central Bank was likely to resort to outright asset purchases.
Top-rated euro zone bond yields inched lower on Thursday after a lackluster response by banks to the European Central Bank’s second round of long-term loans, improving the chances for more aggressive stimulus measures.
German 10-year yields DE10YT=TWEB, the yardstick for euro zone borrowing costs, closed down about 1 basis point at 0.68 percent.
Editing by Dan Grebler, Bernadette Baum nd Steve Orlofsky