Strong US retail sales extend rally on Wall Street

Stocks on Wall Street extended a three-day rally after a better-than-expected jobs report and promising numbers from some retailers.

The number of US workers filing new claims for unemployment benefits fell last week by more than analysts expected.

The Dow Jones Industrial Average closed 120.7 points, or 1.2%, higher at 10,138.99. Over the three days the guage has risen nearly 5%.

DuPont rose 2.6%, while McDonald's gained 2.2% and Boeing rose 1.7%. Technology components lagged, with Intel down 0.5% and Cisco Systems off 0.5%.

After being down for most of the session, the Nasdaq Composite rose near the close to finish 0.7% up at 2175.40. The S&P 500 index was up 0.9% at 1070.25.

Consumer staples strengthened, boosted by strong June sales at warehouse retailer Costco Wholesale. Costco shares gained 1.9% after it said its same-store sales rose 4%.

Retailers oriented to basic consumer needs also gained after the reports showed the stores that did the best during June benefited from aggressive promotions. Walgreen rose 2.7%.

Abercrombie & Fitch jumped 7.1% after same-store sales rose 9%, above analysts' average estimate of 5.5% as the company benefited from promotions.

Limited Brands gained 0.9% after its same-store sales rose 6%, nearly doubling expectations for a rise of 3.2%.

Other markets: Europe up, Asia mixed

European stocks ended higher as hope regarding stress tests for banks boosted beaten-down lenders for a second day.

Some 91 banks are being examined and results are due on July 23. Investors hope the tests restore confidence in the banking system, as tests of US banks did in 2009.

The pan-European Stoxx 600 index ended up 1.0% at 248.6, marking a third straight day of gains.

The UK's FTSE 100 closed up 1.8% at 5105.45, Germany's DAX gained 0.7% to 6035.66 and France's CAC-40 closed up 1.6% at 3538.25.

Most Asian stocks rose as hopes for strong corporate results in the region spurred risk appetite.

China slipped as lingering worries about new share issues weighed on sentiment. A lower Japanese yen helped Tokyo stocks post their biggest percentage gain since early June.

The Nikkei Stock Average climbed 2.8% to 9535.74, Australia's S&P/ASX 200 gained 2.4% to 4356.85 and Korea's Kospi rose 2.4% to 1698.64 were among the day's big gainers.

China's Shanghai Composite slipped 0.3% to 2415.15, Hong Kong's Hang Seng Index added 1% to 20,050.56, Taiwan's Taiex gained 1% to 7608.85, India's Sensex rose 1% to 17,651.73 and Singapore's Straits Times Index rose 1.3% to 2897.15.

Commodities: Oil up, gold down

Oil futures pared gains after a US government report showed an unexpected increase in petrol inventories, suggesting that demand remains weak.

Light, sweet crude for August delivery traded up $US1, or 1.4%, at $US75.07 a barrel in New York, falling from $US75.65 before the US Energy Information Administration released its weekly inventory data. August Brent crude on the ICE futures exchange traded 95USc, or 1.3% higher, to $US74.38 a barrel.

Gold futures fell slightly, settling just above six-week lows. The most actively traded contract, for August delivery, fell $US2.80, or 0.2%, to settle at $US1,196.10 an ounce in New York.

Since falling almost 3% at the end of last week, the August contract has traded in a narrow range, staying within $US15 of the $US1200-an-ounce mark.

Currencies: Euro up, yen down

The euro backed off its highest levels against the dollar in two months after better-than-expected global economic data fueled a rally in assets closely tied to global growth.

For example, the Australian dollar gained more than 0.7% after jobs figures came in stronger than economists had anticipated.

The euro was at $US1.2665 from $US1.2642 late on Wednesday, after hitting $US1.2702, its highest level since May 12.

The dollar was at ¥88.43 from ¥87.75, while the euro was at ¥111.98 from 110.93. The UK pound was at $US1.5120 from $US1.5191.