Oil, global stocks surge on upbeat economic data

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Gold hit a fresh record high on dollar weakness and global stocks surged on Monday after upbeat economic news in the euro zone and better-than-expected US home sales data bolstered appetite for riskier assets.

European shares posted their biggest one-day percentage gain in more than five weeks and an early rally on Wall Street reversed most of the losses from a three-day sell-off last week.

US gold futures hit record highs above USD 1,170 an ounce, gaining more than 2 percent, as the dollar weakened broadly on expectations US interest rates would stay low for some time.

Oil prices almost topped USD 80 a barrel, before paring some gains, as the sagging dollar and signs of buoyant demand from China, the world's second-largest energy consumer, lifted commodity prices.

The dollar slid after a Federal Reserve official affirmed expectations that US interest rates would stay low for some time and US housing data dampened the currency's safe-haven appeal.

Sales of previously-owned US homes jumped in October from the previous month a record 10.1% to their highest level in more than 2-1/2 years, the National Association of Realtors said.

Buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end in November.

"The (housing) data adds to bearish US dollar momentum, as stronger-than-expected home sales data is bullish for equity markets," said George Davis, chief technical strategist at RBC Capital Markets in Toronto. "That decreases risk aversion and increases broad-based dollar weakness.

In Europe, the euro zone's dominant service sector grew at its fastest pace in two years in November, suggesting a recovery will continue in the fourth quarter, albeit at a slower rate, a key survey showed.

The FTSEurofirst 300 index of top European shares rose 2.1% to close at 1,023.49 points, the biggest one-day percentage gain since Oct 14.

The index, which has surged more than 58% since hitting a record low in early March, made up more than half the losses it suffered over the previous four sessions.

At 1 p.m., the Dow Jones industrial average was up 124.62 points, or 1.21%, at 10,442.78. The Standard & Poor's 500 Index was up 15.04 points, or 1.38%, at 1,106.42. The Nasdaq Composite Index was up 29.87 points, or 1.39%, at 2,175.91.

"The rise in home sales was primarily driven by the credit for first-time home buyers. But still, given the unemployment rate and given the number of foreclosures, you have to be very pleased about the numbers. It's stellar," said Tim Speiss, leader of Personal Wealth Advisors group at Eisner LLP in New York.

Prices of euro zone and US Treasury debt eased as higher stocks sapped the safe-haven appeal of government bonds. Investors also prepared for another huge dose of supply of US government debt this week.

St. Louis Fed President James Bullard on Sunday said the US central bank should keep alive its mortgage-related assets purchase program beyond a planned end date to help stimulate the economy.

The benchmark 10-year U.S. Treasury note was down 9/32 in price to yield 3.4%. The 2-year US Treasury note was down 1/32 in price to yield 0.74%.

Oil gained after China's implied demand in October was more than 10 percent higher than a year ago, customs data showed. It was the latest sign consumption is rising in emerging economies despite the lingering impact of the economic crisis.

"Chinese demand is definitely supporting this market as demand in the OECD (Organization for Economic Co-operation and Development) remains relatively weak," said Andrey Kryuchenkov, analyst at VTB Capital in London.

US light sweet crude oil rose 62 cents to USD 78.09 a barrel.

The dollar was down against a basket of major currencies, with the US Dollar Index down 0.76% at 75.083.

The euro was up 0.80% at USD 1.4979, and against the yen, the dollar was up 0.22% at 89.11.

Spot gold prices rose USD 17.50 to USD 1167.00 an ounce.

MSCI's index of Asia-Pacific stocks outside of Japan rose 0.7% after Asian markets closed, and then rose further, up 1.1% after midday in New York. The Nikkei Index in Tokyo, however, fell 0.5%.