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GLOBAL MARKETS-China and Buffett fuel Wall St rally, dollar steady

Published 11/08/2015, 01:42 am
Updated 11/08/2015, 01:46 am
© Reuters.  GLOBAL MARKETS-China and Buffett fuel Wall St rally, dollar steady
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* U.S. indices rally after Buffett's $37.2 billion M&A deal

* Weak China data raises hopes of more stimulus

* September Fed rate hike in focus

* Some optimism over Greece banks (Adds detail on US stocks, Treasuries and dollar)

By Noel Randewich

SAN FRANCISCO, Aug 10 (Reuters) - Wall Street rallied on Monday after a major M&A deal and on weak data out of China that boosted hopes for fresh stimulus from Beijing, while expectations of a U.S. interest rate hike kept the dollar near a four-month high.

All three major U.S. stock indices at one point were over 1 percent higher after a $37.2 billion deal by Warren Buffett's Berkshire Hathaway (NYSE:BRKa) to buy Precision Castparts (NYSE:PCP) showed the M&A boom was alive and well. ID:nL3N10L3ST

Wall Street and other global stock markets also got a boost from hopes that Beijing could take new measures to stimulate the Chinese economy after a report that producer prices in July hit their lowest point since late 2009 and exports tumbled 8.3 percent in the same month. ID:nL3N10K05E

The outlook in China contrasted with solid U.S. jobs data on Friday, which added to expectations that U.S. interest rates would rise as early as September.

The dollar .DXY crept 0.06 percent lower against a basket of currencies but expectations the Federal Reserve is poised to hike rates for the first time in nine years kept it near a four-month high.

Ten-year U.S. Treasury yields US10YT=RR were four basis point higher at 2.2179 percent.

"The jobs data was supportive for a September rate hike," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

"U.S. yields are modestly higher, but dollar/yen needs more widening of the interest rate spread to take it higher."

On Wall Street, the Dow Jones industrial average .DJI jumped 1.02 percent to 17,550.92 and the S&P 500 .SPX gained 0.95 percent to 2,097.26 after moving as high as 2,099.97. The Nasdaq Composite .IXIC added 0.77 percent to 5,082.44.

As the Fed has kept rates near zero for nearly a decade, debt has been cheap, leading to a rise in merger and acquisition activity.

July was the seventh strongest month for global deal activity since 1980, according to Thomson Reuters data, showing the hunger for acquisitions as the Fed prepares to hike rates.

Through the end of July, cross-border M&A activity totaled $913.5 billion, up 23 percent from a year ago.

"The M&A environment is ripe for more deals and at the end of the year you will see a lot more deals than what we saw last year," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

The MSCI All-Country World index .MIWD00000PUS , which tracks shares in 45 nations, was up 0.78 percent.

Euro zone equities rose after a survey showed investor and analyst sentiment weakened only slightly in August, suggesting a relatively robust economic recovery. Major financial shares got a lift from broker upgrades.

There was also some optimism over Greece, where an official said banks could get a first capital injection soon after a bailout deal is agreed, even before the ECB completes a stress test. ID:nL9N0WZ010

Commodity prices took a hit, with London copper trading at six-year lows and crude oil futures touching multi-month lows before recovering.

Brent crude LCOc1 was last up 2.14 percent at $49.67 a barrel. U.S. crude CLc1 was up 1.57 percent at $44.58 per barrel.

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