S&P 500, U.S. crude prices end at 2016 highs

By Caroline Valetkevitch

NEW YORK (Reuters) - The S&P 500 ended at its highest level of the year on Friday as oil prices climbed further and investors reassessed this week's stimulus measures by the European Central Bank.

Oil gains followed an International Energy Agency report that said the oil market may have found a bottom. The IEA report also said production declines were picking up in the United States and other non-OPEC producers, and an increase in supply from Iran was less dramatic than expected.

Partly offsetting the bullish comments, Goldman Sachs lowered its crude oil price forecasts for this year and next year.

Brent rose 34 cents, or 0.9 percent, to settle at $40.39 a barrel, and was up 4 percent for the week. U.S. crude gained 1.7 percent to $38.50, and set a new high for the year. Both U.S. and Brent crude prices are up more than 40 percent from this year's lows.

In the stock market, all three major U.S. stock indexes registered a fourth straight week of gains, while MSCI's all-country world stock index <.MIWD00000PUS> gained 1.8 percent, also putting in a fourth week of increases.

A rise in energy shares helped stocks, while investors also shook off skepticism over the ECB announcements from Thursday.

The ECB had announced a bold new stimulus plan but signaled it was unlikely to cut its negative interest rates further.

After mulling the deal overnight, investors "reassessed and realized it was good news," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

The Dow Jones industrial average <.DJI> closed up 218.18 points, or 1.28 percent, to 17,213.31, the S&P 500 <.SPX> gained 32.62 points, or 1.64 percent, to 2,022.19 and the Nasdaq Composite <.IXIC> added 86.31 points, or 1.85 percent, to 4,748.47.

The S&P 500 also ended above its 200-day moving average for the first time since Dec. 30.

In Europe, shares also rebounded after falling sharply Thursday on the ECB news. The pan-regional FTSEurofirst 300 index <.FTEU3> ended 2.7 percent higher.

The euro dipped against the dollar, a day after rallying on the ECB announcements. It was last down 0.2 percent at $1.1155.

As well as cutting all its main interest rates, the ECB lifted its asset-buying program by 20 billion euros a month and expanded the assets to include non-bank corporate debt.

FED AHEAD

U.S. Treasury yields rose as investors bet the U.S. economy was healthy enough for the Federal Reserve to raise interest rates this year.

The benchmark 10-year note note was last down 14/32 in price to yield 1.979 percent, up from 1.929 on Thursday.

In its statement following a two-day policy meeting on Wednesday, the U.S. central bank is widely expected to hold its key rate steady after hiking it in December for the first time in nearly a decade. Economists polled by Reuters expect an increase by the end of June and one more before the year is out.

Recent U.S. economic data has eased concerns that the United States might be heading for a recession and also helped fuel the benchmark S&P 500 index's 11-percent recovery since mid-February.

Gold fell as the dollar rebounded. U.S. gold for April delivery settled down 1.1 percent at $1,259.40 an ounce, after peaking at $1,287.80.

(Additional reporting by Laila Kearney in New York and Marc Jones in London; Editing by Bernadette Baum and Nick Zieminski)

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