* U.S. housing starts rise, jobless claims fall more than expected
* Cisco, Walmart (NYSE:WMT) shares rise after earnings, buoying Wall St
* Germany's DAX jumps, leads European markets higher
* Trade in focus after latest U.S. sanctions on Huawei
* Oil prices rise as Middle East tensions persist (Updates with close of U.S. markets)
By Lewis Krauskopf
NEW YORK, May 16 (Reuters) - World stock markets were buoyed by deal-making news and solid earnings from Dow components Cisco and Walmart on Thursday while strong economic data pushed U.S. bond yields higher even as investors struggled to make sense of the latest developments in global trade relations.
A spike in U.S.-China tensions over import tariffs has convulsed markets recently as investors seek to parse statements from government leaders to gauge the direction of negotiations.
News that U.S. President Donald Trump is expected to delay auto tariffs appeared to improve the trade tone on Wednesday, but later in the day the Trump administration hit Chinese telecoms giant Huawei with severe sanctions. overall market sentiment got pretty negative the last couple of days," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta. "And I think it was just a set-up where we had a little bit of good news that has gone a long way, at least for today.
“It makes sense that you are having a little bit of reprieve today based on a little better economic data and a little bit better earnings data which is drawing the attention away from China, which is still a big uncertainty right now,” Lerner said.
Wall Street's main indexes ended solidly positive but below their session highs. The Dow Jones Industrial Average .DJI rose 214.66 points, or 0.84%, to 25,862.68, the S&P 500 .SPX gained 25.36 points, or 0.89%, to 2,876.32 and the Nasdaq Composite .IXIC added 75.90 points, or 0.97%, to 7,898.05.
Shares of Cisco Systems CSCO.O and Walmart WMT.N both gave boosts to the S&P 500 and the Dow after their respective earnings reports. Cisco shares rose 6.7% and Walmart rose 1.4%. Philadelphia semiconductor index .SOX fell 1.7% following the Huawei news.
The pan-European STOXX 600 index .STOXX rose 1.27%. DAX .GDAXI jumped 1.7%, fueled by news of corporate deals. Thyssenkrupp TKAG.DE shares rose 9.4% after Reuters reported Finnish company Kone KNEBV.HE is assessing a bid for the German conglomerate's elevators division. gauge of stocks across the globe .MIWD00000PUS gained 0.58%.
U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought. In a separate report, the number of Americans filing applications for unemployment benefits fell more than expected last week. Treasury yields rose following the strong economic data. 10-year notes US10YT=RR last fell 6/32 in price to yield 2.398%, from 2.379% late on Wednesday.
"I'm a little surprised that with stocks so strong, the yields aren't even higher because this doesn't seem to be that big of a move in the scheme of things," said Lou Brien, market strategist at DRW Trading.
The U.S. dollar rose against a basket of currencies as investors focused on trade war tensions, while the euro was hurt by concerns about next week's European parliamentary elections. dollar index .DXY rose 0.26%, with the euro EUR= down 0.21% to $1.1176.
Oil prices jumped as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in Yemen in retaliation for recent attacks on its crude infrastructure. crude CLcv1 rose 1.4% to settle at $62.87 a barrel, while Brent LCOcv1 settled at $72.62 a barrel, up 1.2%.
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