NEW YORK World stock and commodity markets rose on Thursday on encouraging economic data, while U.S. stocks extended a six-day rally, sailing through the headwind of a revenue miss from Apple.
The yen resumed its drop and oil rose.
Business surveys showed growth in Chinese manufacturing accelerated to a two-year high in January and a buoyant Germany was leading the euro zone toward recovery. But they also revealed France was sliding back into recession.
The broad S&P 500 and the Dow Jones industrials stock market indices both advanced. The Nasdaq composite index was lower, but the entire loss - and more - was due to the drag from a 9.8 percent drop in the value of Apple (AAPL.O).
MSCI's world equity index rose 0.33 percent, while Europe's FTSE Eurofirst 300 index gained 0.27 percent.
In the United States, the Conference Board's Leading Economic Index rose 0.5 percent to 93.9 last month, pointing to improved U.S. growth ahead.
"Leading economic indicators rose, new jobless claims are at the lowest level in many years, and Chinese manufacturing data moved to a positive trajectory," said Quincy Krosby, market strategist at Prudential Financial in Newark, with more than $1 trillion in assets under management. "The Chinese data bodes well for demand which translates into top line revenue growth. If global demand goes up, it's good for U.S. equities."
The Dow Jones industrial average was up 77.37 points, or 0.56 percent, at 13,856.70. The Standard & Poor's 500 Index was up 3.82 points, or 0.26 percent, at 1,498.63. The Nasdaq Composite Index was down 8.22 points, or 0.26 percent, at 3,145.45.
Apple shares were down 10.3 percent at $461.
The stock market's continued strength and news that the number of Americans filing new claims for jobless benefits hit a five-year low last week weighed on safe-haven U.S. debt.
The benchmark 10-year Treasury note fell 9/32 in price; its yield rose to 1.86 percent, as investors moved funds into stocks.
"It's a reach for return in the equities market," said Todd Colvin, senior vice president of global institutional sales with R.J. O'Brien & Associates in Chicago. "Risk takers are being rewarded so far this year."
For the euro zone as whole, January's flash euro zone purchasing managers index pointed to more weakness ahead for a region already mired in recession. But it also pointed to improvement later in the year.
"The pace of recession is clearly easing," said Marco Valli, chief euro zone economist at UniCredit.
The data showed the contrasting fortunes of Germany and France, with German activity at its strongest levels in a year and the French PMI at its lowest level since March 2009.
"The current gap between the German and French composite PMI indices is unprecedented," said Ken Wattret, chief euro zone economist at BNP Paribas.
That gap helped lift German bond prices to a three-week high, a move supported by Spanish data showing another record high unemployment rate and a rising tide of bad bank loans.
French bonds were seemingly unaffected by the data, with the 10-year bond yield 3 basis points lower on the day at 2.17 percent.
Investors in British stocks shrugged off worries about Europe and focused on the better Chinese manufacturing data and its implications for mining companies. That pushed London's FTSE 100 up 1.09 percent.
The growing confidence in the pace of China's economic recovery helped keep Brent crude oil above $113 a barrel and copper rose to $8,115 a tonne. Gold was priced at $1,672.36 an ounce.
In the currency markets, the yen posted steep losses across the board after three days of gains, hurt by Japan's record trade deficit and comments from a Japanese economic official saying the government has no problem with the dollar hitting 100 yen.
Traders cited reports quoting Deputy Economy Minister Yasutoshi Nishimura as saying the yen's decline is not over and a dollar/yen level of 100 would not be a concern.
"(Nishimura) represents another official voice favoring further yen weakness and the remarks probably supported the latest bounce in dollar/yen, which began overnight," said Bob Lynch, chief currency strategist at HSBC in New York.
The dollar was last up 1.59 percent at 90.00 yen, rallying from a one-week low of 88.06 yen hit the previous day.
The yen's weakness became further entrenched after Prime Minister Shinzo Abe said he expected the Bank of Japan to achieve its 2 percent inflation goal as soon as possible.
Earlier this week, the BoJ delivered its most aggressive policy easing yet to snap the economy out of years of stagnation.
The euro rose 0.4 percent against the dollar at $1.3372, not far from an 11-month high hit on January 14. The euro was up 1.6 percent against the yen at 119.92 yen.
Analysts said an influential German Ifo survey due on Friday, along with an announcement on bank plans to repay loans taken from the European Central Bank a year ago, would sway the euro in the coming days.
(Additional reporting by Gertrude Chavez-Dreyfuss and Richard Leong in New York and Richard Hubbard in London; Editing by Dan Grebler)
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