December 23, 2014 / 1:42 AM / 4 years ago

Shares gain on strong U.S. GDP data; oil rises

NEW YORK (Reuters) - U.S. and European shares rose on Tuesday, with the Dow industrials ending above 18,000 for the first time after an unexpectedly strong report on U.S. economic growth supported risk appetite and lifted oil prices.

Trader Kevin Lodewick works on the floor of the New York Stock Exchange, which has been decorated with Christmas lights, in New York December 22, 2014. REUTERS/Carlo Allegri

Both the Dow and the S&P 500 hit record closing highs after the Commerce Department said the final estimate of U.S. gross domestic product for the third quarter was revised up to a 5 percent annual pace, its quickest in 11 years, from 3.9 percent reported last month. Stronger consumer and business spending fueled the surge.

The data reassured investors that the U.S. economic expansion could buoy the global economy and that recent declines in oil prices were a boon for consumers. The data also boosted oil prices by supporting expectations of greater demand for crude.

The gains in U.S. shares pushed the Dow over 18,000 for the first time in its history. The index rose as high as 18,069.22 and is up about 175 percent from a 12-year closing low hit on March 9, 2009. The S&P’s record close was its 51st such record this year.

“The GDP data just further emboldened investor confidence to buy stocks in the near term,” said Michael Cuggino, president and portfolio manager at Permanent Portfolio Family of Funds in San Francisco.

Other data showed U.S. consumer sentiment jumped in December to its highest level in nearly eight years on cheaper gasoline and better job and wage prospects.

The data strengthened the U.S. dollar, which hit its highest level against a basket of major currencies in over 8 years, while the euro plumbed 28-month lows against the greenback.

The U.S. data combined with positive economic news from Spain and Portugal to push European equities higher. A fall in Greek stocks limited gains in European shares, however, on the prospect of early elections that could put Greece’s rescue package at risk.

Weak sentiment in China, meanwhile, halted a four-day rally in emerging market shares and resulted in a measure of worldwide equity markets trading mostly flat.

MSCI’s all-country world index .MIWD00000PUS was last down just 0.05 percent at 419.93. Europe’s broad FTSEurofirst 300 index .FTEU3 closed up 0.57 percent at 1,374.8.

The Dow Jones industrial average .DJI closed up 0.36 percent at 18,024.17. The S&P 500 .SPX closed up 0.17 percent at 2,082.17. The Nasdaq Composite .IXIC closed down 0.33 percent at 4,765.42.

U.S. safe-haven Treasury yields, which move inversely to prices, jumped following the U.S. data and a tepid five-year note auction. Benchmark 10-year Treasury yields US10YT=RR were last at 2.26 percent, from a yield of 2.16 percent late Monday.

The dollar index .DXY, which tracks the greenback versus a basket of six currencies, was last up 0.39 percent at 90.121.

Brent crude LCOc1 settled up $1.58 at $61.69 a barrel. U.S. crude CLc1 settled up $1.86 at $57.12 per barrel.

Spot gold prices XAU= were last up 5 cents at $1,174.71 an ounce.

Additional reporting by Chuck Mikolajczak and Barani Krishnan in New York and Sudip Kar-Gupta and Christopher Johnson in London; Editing by Dan Grebler and Meredith Mazzilli

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