World Shares Rise On U.S. Spending, Inflation Data

World shares rose and the dollar weakened on Friday after data showed that U.S. consumer spending rose in April and the uptick in inflation slowed, two signs the world's largest economy could be on track to grow this quarter.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.9% last month, and although inflation continued to increase in April, it was less than in recent months. The personal consumption expenditures (PCE) price index rose 0.2%, the smallest gain November 2020.

The U.S. Federal Reserve, in minutes from its May meeting released earlier this week, called inflation a serious concern. A majority of the central bankers backed two half-of-a-percentage point rate hikes in June and July, as the group attempts to tighten policy enough to curb inflation without tipping the economy into recession.

The Fed did also suggest the potential for a pause later in the year if the economy were to show greater signs of weakness.

Analysts called the spending and inflation data encouraging and supportive of growth estimates for the second quarter that are mostly above a 2.0 annualized rate.

"This was a step in the right direction," said Brian Jacobsen, senior investment strategist with Allspring Global Investments. "We'll need a number of runs of falling inflation before it can come close to the Fed's threshold of being 'clear and convincing.'"

The MSCI world equity index, which tracks shares in 45 nations, rose 10.29 points or 1.61% at about 10:30 a.m. EDT (1430 GMT).

Global equity funds saw inflows in the week to May 25 for the first week in seven, according to Refinitiv Lipper.

European shares hit a three-week high rose 1.33%.

Britain's FTSE also hit a three-week high, and was heading for its best weekly showing since mid-March. [.L]

Emerging market stocks rose 1.96%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.24% higher, while Japan's Nikkei rose 0.66%.

The Dow Jones Industrial Average rose 256.38 points, or 0.79%, to 32,893.57, the S&P 500 gained 66.27 points, or 1.63%, to 4,124.11 and the Nasdaq Composite added 284.27 points, or 2.42%, to 12,024.92.

Asian shares also benefited from hopes of stabilizing Sino-U.S. ties and more Chinese government stimulus.

The United States would not block China from growing its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.

The swing toward broadly positive market sentiment drove the dollar to one-month lows against an index of currencies.

The dollar index was last down 0.088%, and the euro up 0.05% to $1.0729.

Oil prices were near two-month highs on the prospect of a tight market due to rising gasoline consumption in the United States in summer, and also the possibility of an EU ban on Russian oil.

But U.S. crude futures were marginally lower on Friday, down 0.06% to $114.02 per barrel. Brent was at $117.93, up 0.45% on the day. [O/R]

The yield on benchmark 10-year Treasury notes dipped to 2.7164%. It had hit a three-year high of 3.2030% earlier this month on fears rapid hikes from the Fed might undermine long-term growth.

The two-year yield, which rises with traders' expectations of higher fed fund rates, fell to 2.4678%.

German 10-year bond yields fell 4 bps to 0.955%.

Spot gold added 0.2% to $1,854.49 an ounce.[GOL/]