GLOBAL MARKETS-Shares, bonds gain as fears of immediate Fed exit ease
* Wall St extends gains for third day; S&P up more than 1 pct
* Fed bond buying could be more aggressive than new timeline -Dudley
* Precious metals rebound, oil extends gains
NEW YORK, June 27 (Reuters) - World equity markets and bonds rose on Thursday, showing further signs of stabilizing from a dramatic selloff as investors' view strengthened that major central banks' monetary stimulus measures would stay in place for the time being. Wall Street opened higher, with the S&P 500 rising more than 1 percent in early trade after a Federal Reserve official reiterated that any change in monetary policy will depend on data. Although U.S. economic data showed improvements in the housing sector and consumer spending, the number of Americans filing new claims for unemployment benefits fell only slightly last week - down 9,000 to 346,000, against an expected fall to 345,000 - in line with the recent moderate pace of jobs growth.
"I don't think we have seen the end of the economic crisis partial and that is lending support to the gold price," Sharps Pixley Chief Executive Ross Norman said. Spot gold was up 0.6 percent to $1,232 an ounce after a 4 percent fall on Wednesday took the metal to its lowest since August 2010, at $1,221.80. U.S. Treasuries prices gained on Thursday as bond markets showed more signs of stabilizing. Treasuries have held a firmer tone this week after being roiled last week when Fed Chairman Ben Bernanke said the U.S. central bank is likely to pare its bond purchase program later this year if the economy continues to improve. Federal Reserve Bank of New York President William Dudley stressed in a speech that the newly adopted timeline for reducing the pace of bond buying depends not on calendar dates but on the economic outlook, which remains quite unclear.
"The Fed has made efforts to talk the market back from those assumptions" that it is likely to start paring its bond purchases in September, said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut. Benchmark 10-year Treasuries were last up 10/32, the yield at 2.5 percent, after earlier trading as low as 2.47 percent.
MARKETS RECOVER European shares extended gains, rising more than 1 percent and building on the 3.2 percent recovery of the past two days after dropping 11 percent last week. MSCI's world share index rose 1.2 percent to its highest level in a week before slipping slightly. In U.S. trading, the Dow Jones industrial average was up 120.88 points, or 0.81 percent, at 15,031.02. The Standard & Poor's 500 Index was up 12.17 points, or 0.76 percent, at 1,615.43. The Nasdaq Composite Index was up 27.89 points, or 0.83 percent, at 3,404.12. The benchmark S&P 500 had dropped as much as 4.8 percent in the days following a June 19 statement from the Federal Reserve. But it has rebounded to climb 1.9 percent over the past two sessions as economic data and comments from Fed officials quelled fears of an earlier-than-expected pullback of stimulus. Brent crude oil rose for a fourth session to above $102 a barrel and was on track for its longest stretch of daily gains since mid-March. U.S. crude was up $1.44 at $96.44. The dollar was last at 98.36 yen, up 0.6 percent, after climbing as high as 98.45 yen. The euro was last at $1.3019, up 0.1 percent, after falling as low as $1.3007. The session low was touched earlier at $1.3002.
YIELDS YIELD With the yield on benchmark 10-year U.S. government debt appearing to have stabilized at around 2.5 percent, euro zone bonds from Germany to Greece were able to claw back some of the ground lost during the recent global selloff. Reflecting the recent rise in yields generally over the last few weeks, Italy paid its highest rate since March at a 5 billion euro auction of 10- and 5- year debt. But healthy demand boosted its bonds to top the list of periphery performers.
Markets also focused on a deal hammered out by European authorities overnight designed to shift the burden of paying for bank bailouts away from taxpayers, although economists' opinions on the deal were mixed.