Wall St. stocks rise while bond yields fall with dollar

By Sinead Carew

NEW YORK (Reuters) - U.S. stocks closed higher on Tuesday despite mixed U.S. economic data as treasury yields and the dollar declined while oil prices were choppy ahead of an OPEC meeting later this week.

The euro bounced back from a multi-month low against the U.S. dollar on strong European data and as investors pared bets that the European Central Bank will soon ease policy further.

After falling 0.5 percent on Monday, the S&P 500 benchmark index of stocks closed at its highest since early November as investors gained confidence on the first day of the month.

The U.S. manufacturing sector contracted last month to its weakest level since June 2009, while construction spending rose in October to the highest level since December 2007.

"Look at the manufacturing numbers. That was clearly a disappointment, yet the market ploughed right through. We've got a market that seems to have found a path of least resistance to the upside," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

While the data boosted U.S. Treasury debt prices, it pushed benchmark yields toward one-month lows, helping to make stocks "compelling," Hogan said. He also noted that positive online results boosted investor holiday shopping season expectations.

The Dow Jones industrial average <.DJI> rose 168.43 points, or 0.95 percent, to 17,888.35, the S&P 500 <.SPX> gained 22.22 points, or 1.07 percent, to 2,102.63 and the Nasdaq Composite <.IXIC> added 47.64 points, or 0.93 percent, to 5,156.31.

Investors were focused on Friday's November jobs report, which is expected to influence timing for the first U.S. interest rate hike since 2006. Most analysts expect an increase after the Federal Reserve's Dec. 15-16 meeting.

The dollar fell after the U.S. manufacturing data and upbeat European economic data knocked the greenback from 8-1/2-month highs against a basket of major currencies.

The euro was last up 0.6 percent at $1.0624 while the dollar index <.DXY>, which measures the greenback against six major peers, was 0.34 percent lower at 99.837.

The euro's rise stemmed from strong European data and doubts whether the ECB would add to its economic stimulus at a meeting on Thursday. The single currency has fallen about 8 percent against the dollar since mid-October.

Benchmark Brent crude oil fell on bets OPEC will not cut output to stem a supply glut when the world's biggest oil producers meet later this week, but U.S. crude steadied.

Brent settled down 17 cents or 0.38 percent at $44.44 a barrel. After falling earlier in the day, WTI crude futures settled up 0.5 percent at $41.85 a barrel.

U.S. benchmark 10-year Treasury notes were last up 19/32 in price to yield 2.150 percent, down sharply from a yield of 2.218 percent late Monday. The 10-year yield hit a near one-month low of 2.145 percent in the wake of the U.S. manufacturing data.

The FTSEurofirst 300 <.FTEU3> finished off 0.4 percent, but Wall Street's advance and a near 2 percent gain in Hong Kong's Hang Seng index <.HSI> pushed MSCI's measure of stocks in major markets <.MIWD00000PUS> up 0.97 percent.

Spot gold , down for the past six weeks, was up about 0.4 percent at $1,068.66 an ounce as the dollar weakened.

(Additional reporting by Rodrigo Campos, Tanya Agrawal and Dion Rabouin; Editing by Nick Zieminski and Dan Grebler)

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