Global equity markets rose and the dollar edged higher against the euro and yen on Monday after U.S. retail sales for March came in higher than expected, suggesting economic growth in the first quarter was not as weak as many had feared.
Total retail sales increased 0.8 percent after rising 1.0 percent in February, the Commerce Department said, as Americans shrugged off high gasoline prices and bought a range of goods.
The sales gain surpassed economists' expectations for only a 0.3 percent rise and could prompt analysts to raise their first-quarter growth forecasts of about 2.5 percent annually.
However, the optimism over retail sales was tempered by a separate report that showed manufacturing in New York state slowed sharply in April, although factories hired more workers and received higher prices for their goods.
Equities on Wall Street opened higher and European stocks rose more than 1 percent even though analysts were split on whether to focus on the retail sales data or the New York Federal Reserve Bank's Empire State manufacturing activity index.
On balance, things are better than they were last year, earnings will bear that out and we will also to continue to see more good news than bad, said Tim Holland, co-portfolio manager, Aston/TAMRO Diversified Equity Fund in Alexandria, Virginia.
The Dow Jones industrial average <.DJI> was up 82.04 points, or 0.64 percent, at 12,931.63. The Standard & Poor's 500 Index <.SPX> was up 6.84 points, or 0.50 percent, at 1,377.10. The Nasdaq Composite Index <.IXIC> was up 13.72 points, or 0.46 percent, at 3,025.05.
The FTSE Eurofirst <.FTEU3> index of top European shares was up 1.2 points at 1,039.88.
Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, said details in the retail sales report suggested less stellar sales figures that will not change forecasts for gross domestic product in the first quarter.
The headline number came in better-than-expected, but once you look at the details, it was pretty moderate. We are hanging in here. This is not going to do much to Q1 GDP forecasts, Brown said.
The dollar was up against a basket of major trading-partner currencies, with the U.S. Dollar Index <.DXY> up 0.09 percent at 79.957. The euro was down 0.21 percent at $1.3047 and against the Japanese yen, the dollar was down 0.28 percent at 80.66.
Front-month Brent crude slipped $1.28 to $119.93 a barrel. U.S. light sweet crude oil rose 17 cents to $103.00 per barrel.
The benchmark 10-year U.S. Treasury note was unchanged with the yield at 1.99 percent.
Earlier in Europe the yield on Spanish debt rose above 6 percent as investors worried about its budget deficit, sending safe-haven German bonds to a record last set at the height of the euro zone crisis.
Spanish stocks plunged to three-year lows and the economy minister said the country had probably tipped back into recession for the second time since 2009.
(Additional reporting by Richard Hubbard in London; Editing by Chizu Nomiyama)