U.S. Markets closed

Stocks, dollar gain on strong U.S. retail sales

A man takes a photo of an electronic stock quotation board with his smartphone outside a brokerage in Tokyo, June 9, 2015. REUTERS/Issei Kato

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose on Thursday on optimism over still testy Greek debt talks and on strong U.S. retail sales, which lifted the U.S. dollar and bolstered expectations the Federal Reserve will raise interest rates this year.

European shares pared gains after the International Monetary Fund's delegation unexpectedly left Brussels and flew home, citing major differences with Athens. Greece wants to step up negotiations, a Greek spokesman said later.

U.S. retail sales rose 1.2 percent in May after an upwardly revised 0.2 percent gain in April, the Commerce Department said, as households boosted purchases of automobiles and other goods.

While other U.S. data showed a slight increase in new applications for unemployment benefits, that number remained in a range associated with a tightening labor market and could push Fed policymakers to raise rates at the end of the summer.

"The market, which had been expecting something after September, now may be slipping more towards lift-off in September," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.

European shares rose, with the auto sector gaining on an upbeat forecast from Daimler, while Greek shares rallied 8.2 percent on hopes that a resolution to its nagging debt woes was near. The market closed before the IMF news.

MSCI's all-country stock index rose 0.24 percent, while the pan-European FTSEurofirst 300 index closed up 0.59 percent to 1,557.95, after being more than 1 percent higher earlier in the session.

Stocks on Wall Street rose but held within a months-long trading range.

"The choices for a lot of people remain stocks or bonds, and the resilience of stocks, even as rates have risen at least in the short run, has given people confidence that it's the better place of the two to be," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

The Dow Jones industrial average closed up 38.97 points, or 0.22 percent, to 18,039.37. The S&P 500 gained 3.66 points, or 0.17 percent, to 2,108.86 and the Nasdaq Composite added 5.82 points, or 0.11 percent, to 5,082.51.

The dollar rebounded from three weak days, gaining as much as 1.1 percent against the yen after posting its biggest single-day drop in six months against the Japanese currency on Wednesday.

The dollar last traded at 123.36 yen, up 0.58 percent on the day, and was up 0.54 percent against the euro at $1.1263. The dollar index rose 0.33 percent.

U.S. Treasuries yields neared session lows after the IMF comments raised doubts that Greece was close to a deal to avert default, spurring safe-haven demand for U.S. government debt.

The yield on benchmark 10-year Treasuries was last at 2.3808 percent, up 27/32 in price. Earlier, the 10-year yield hit a seven-month high of 2.500 percent.

Yields on German 10-year Bunds, the benchmark for euro zone borrowing costs, fell 12 basis points to 0.89 percent.

British 10-year gilts posted their strongest one-day price gain in four weeks, tracking German bond prices higher after the IMF broke off talks with Greece.

Oil prices declined further due to the stronger dollar and a gloomy economic forecast by the World Bank, while a bullish International Energy Agency (IEA) report on global demand failed to dispel concerns over a supply glut.

Brent crude oil for July fell 59 cents to settle at $65.11 a barrel. U.S. crude settled down 66 cents at $60.77 a barrel.

(Editing by Nick Zieminski and Meredith Mazzilli)