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Global stocks surge on U.S. corporate results, bonds fall

Global stocks surge on U.S. corporate results, bonds fall

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose on Thursday, with stocks on Wall Street surging more than 1 percent as U.S. corporate earnings continued to beat expectations, while government debt prices fell on encouraging American and German economic reports.

Results from Caterpillar Inc and 3M Co, both Dow components, reassured investors that companies with large overseas revenue streams can deliver solid profits despite concerns about global economic growth.

Shares of Caterpillar, which raised its full-year earnings outlook, rose 5.0 percent, while 3M shares jumped 5.9 percent.

The surge put the benchmark S&P 500 index up 3.6 percent for this week, reversing four straight weeks of decline, and on track for its biggest weekly gain since January 2013.

"If we're looking at headwinds like currency and slowing global growth, seeing multinationals like Caterpillar and 3M post solid beats gives us confidence that economic growth is holding on and probably better than the market is currently expecting," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

With 177 of the S&P 500 companies having posted third-quarter results, 69.5 percent have beaten expectations, better than the 67 percent beat rate over the past four quarters, and higher than the 20-year average of 63 percent, Thomson Reuters data show.

The surge on Wall Street helped turn around European stocks, which initially fell on weak results from some companies, including French tire-maker Michelin, despite support from better-than-expected euro zone business activity data.

Michelin closed down 4.9 percent.

MSCI's all-country world index, which gauges equity performance in 45 countries, rose 0.75 percent, while the pan-European FTSEurofirst 300 of leading regional companies rebounded to close up 0.65 percent at 1,317.28.

The Dow Jones industrial average was up 261.96 points, or 1.59 percent, at 16,723.28. The Standard & Poor's 500 Index was up 27.95 points, or 1.45 percent, at 1,955.06. The Nasdaq Composite Index was up 76.79 points, or 1.75 percent, at 4,459.64.

Bond prices fell, with German government bond yields higher after the unexpected uptick in euro zone business surveys staved off fears the bloc could be headed for a triple-dip recession. U.S. Treasury yields climbed to their highest levels in over a week after weekly jobless claims fell to the lowest since late 2000.

The yield on 10-year German Bunds rose almost 4 basis points to 0.902 percent, while Bund futures fell 38 ticks to settle at 150.26.

Ten-year U.S. Treasuries fell 18/32 in price to yield 2.2926 percent.

The dollar see-sawed against the euro and pushed higher against the yen. The euro rebounded off two-week lows, rising 0.09 percent to $1.2659. The dollar rose 1.0 percent to 108.21 yen.

Brent crude oil rose above $85 a barrel on news Saudi Arabia cut supply to the market in September, even though its overall production grew month on month, and on strong economic data from Europe and China.

OPEC's largest producer pumped 9.7 million barrels per day in September, up from around 9.6 million in August, an industry source said on Thursday.

Brent crude for December was up $1.83 at $86.54 a barrel. U.S. front-month crude was up $1.18 at $81.70.

(Reporting by Herbert Lash; Additional reporting by Ryan Vlastelica in New York; Editing by Dan Grebler)