* Fed's Williams says could begin stimulus withdrawal this
summer
* U.S. consumer sentiment rises to highest in nearly 6 years
* U.S. dollar index hits nearly three-year high, stocks
climb
* U.S. Treasuries prices fall further after sentiment data
By Herbert Lash
NEW YORK, May 17 (Reuters) - Global equity markets rose and
the dollar soared against a basket of currencies on Friday,
reaching a nearly three-year peak, as speculation mounted over
whether the Federal Reserve would soon begin to rein in its
asset-buying program.
Wall Street opened higher, with the benchmark S&P 500
rebounding from its worst decline in nearly three weeks,
following gains in European shares that were lifted by carmakers
cheered on by signs of a revival in domestic sales.
Also lifting stocks was a survey that showed a rebound in
U.S. consumer sentiment in early May to the highest level in
nearly six years as Americans felt better about their financial
and economic prospects, particularly among upper income
households.
The dollar's strength was largely attributed to the euro,
which fell to a six-week low on market talk that the European
Central Bank could introduce negative deposit rates, a move that
would make banks pay to park their cash overnight with the ECB.
The dollar index, which measures its value against a
basket of six major currencies, rose to 84.312, its highest in
nearly three years. It last traded at 84.262, up 0.81 percent on
the day.
The euro fell 0.55 percent to $1.2810, while the
dollar hit a 4-1/2 year high versus the Japanese yen, up
0.55 percent at 102.80.
"People are positive about the U.S. economic recovery
despite recent weak data and today's theme is mostly about the
broadly strong dollar," said Charles St-Arnaud, FX strategist at
Nomura Securities.
"Meanwhile, data in the euro zone shows they remain in a
recession and raised expectations the ECB will take further
action is weighing on the euro," he said.
A measure of global equity activity, MSCI (NYSE: MSCI - news) 's all-country
world stock index, rose 0.05 percent.
The Dow Jones industrial average was up 66.70 points,
or 0.44 percent, at 15,299.92. The Standard & Poor's 500 Index
was up 9.98 points, or 0.60 percent, at 1,660.45. The
Nasdaq Composite Index was up 19.64 points, or 0.57
percent, at 3,484.89.
European shares bounced off session lows to rise
0.23 percent to 1,248.30.
Gold fell for a seventh straight session, its longest losing
streak in four years, driven by speculation the Fed may soon
ease its asset-purchase program to boost the economy.
Spot gold prices fell $16.49 to $1,369.20 an ounce.
Comments on Thursday from John Williams, president of the
Federal Reserve Bank of San Francisco, that the Fed could begin
easing up on stimulus this summer stirred speculation.
Prices for U.S. Treasuries added to losses after the Thomson
Reuters/University of Michigan's preliminary reading on the
overall index on consumer sentiment rose to 83.7 in early May
from 76.4 last month, topping economists' expectations for 78.
It was the highest level since July 2007.
The benchmark 10-year U.S. Treasury note was
down 11/32 in price to yield 1.9175 percent.
In Europe, German Bunds hit one-week highs, with traders
citing talk the ECB was checking with some banks on whether they
were ready for a potential cut in its deposit rate to below
zero.
German Bund futures rose as much as 43 ticks on the
day to 145.74, before paring gains to trade 9 ticks higher.
Oil climbed towards $105 a barrel, rebounding from an
earlier decline and heading for a small weekly gain, although
concern about the strength of demand growth limited the rise.
Brent crude rose 78 cents to $104.56 a barrel. U.S.
crude future added 68 cents to $95.84.
