Dollar, stocks rebound on strong U.S. data

The dollar and global equity markets rebounded Thursday after three days of declines, spurred by strong U.S. retail sales and declining jobless claims that signaled the U.S. economy could weather weak oil prices and a likely interest rate hike next year.

U.S. consumer spending advanced at a brisk clip in November as lower gasoline prices gave holiday shopping a boost and offered the latest sign of an economy still gathering momentum.

"We are starting to get some metrics around the energy and we are seeing that one 'X' factor of, 'Will consumers spend this extra money?'" said Sean McCarthy, regional CIO for Wells Fargo Private Bank in Scottsdale, Arizona. "And in the holiday season, they are (spending), and more so."

The dollar rose 1.29 percent to 119.33 yen JPY=, reversing a three-day drop that started after the greenback hit a seven-year peak against the Japanese currency on Monday.

The euro EUR= fell 0.52 percent to $1.2382.

The S&P 500 .SPX equity index has shed 2.4 percent over the past three sessions, the benchmark's worst run in two months, as tumbling oil prices weighed on the energy .SPNY sector.

But crude's weakness helped holiday spending, and retail sales data for November beat expectations. The S&P retail index .SPXRT jumped 1.77 percent, lifted by a 2.0 percent climb by Home Depot (HD.N) to $100.89.

MSCI's all-country world stock index .MIWD00000PUS rose 0.33 percent to 416.14, while the FTSEurofirst 300 .FTEU3 index of top European shares closed up 0.02 percent at 1,359.11.

Most euro zone stock indexes turned higher in late trading in response to the U.S. data. Worries about the upcoming Greek presidential elections and a slump in commodity prices had pushed regional shares lower over the past three days.

On Wall Street, the Dow Jones industrial average .DJI rose 191.03 points, or 1.09 percent, to 17,724.18. The S&P 500 .SPX gained 24.91 points, or 1.23 percent, to 2,051.05 and the Nasdaq Composite .IXIC added 63.30 points, or 1.35 percent, to 4,747.33.

Brent crude moved higher after dipping below $64 a barrel on signs that ample supplies will be even more plentiful in 2015 following an Organization of the Crude Exporting Countries forecast.

Prices fell Wednesday after U.S. crude inventories unexpectedly rose and OPEC's most influential voice, Saudi Arabia's oil minister, shrugged off the need for an output cut.

North Sea Brent crude LCOc1 rebounded 21 cents to $64.45 a barrel after earlier slumping to a session low of $63.70. U.S. crude CLc1 fell 6 cents to $60.88 a barrel.

Intermediate-dated U.S. Treasuries weakened and the yield curve neared its flattest in six years after the U.S. economic data.

Three-year notes US3YT=RR fell 4/32 in price to yield 1.0610 percent, up from 1.02 percent late on Wednesday.

Benchmark 10-year notes US10YT=RR fell 7/32 in price to yield 2.1953 percent.

British 20- and 30-year government bond yields hit record lows as euro zone debt rallied on bets the European Central Bank was likely to resort to outright asset purchases.

Top-rated euro zone bond yields inched lower on Thursday after a lackluster response by banks to the European Central Bank's second round of long-term loans, improving the chances for more aggressive stimulus measures.

German 10-year yields DE10YT=TWEB, the yardstick for euro zone borrowing costs, closed down about 1 basis points at 0.68 percent.