(Adds close of European markets)
* Pharmas fall after U.S. backs waiving IP on COVID vaccines
* Euro zone retail sales beat expectations
* Gold gains, oil and dollar ease
* Global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, May 6 (Reuters) - The dollar fell and a gauge of
global equity markets edged higher on Thursday as surging
commodity prices spurred the prospect of rising inflation and
led investors into economically sensitive stocks on the
reflation trade.
Aluminum prices approached levels last seen in 2018 and
copper CMCU3 prices flirted with 10-year peaks. Gold jumped
more than 1% as the weaker dollar and easing Treasury yields
propelled the precious metal, an inflation hedge, above the key
$1,800 an ounce psychological level.
Treasury yields moved in a narrow range as investors largely
shrugged off better-than-expected initial U.S. jobless claims
data and waited for Friday's April non-farm payrolls report for
market direction.
Investors fear inflation may be more prolonged than the
messaging from the Federal Reserve, which has said rising
consumer prices will be temporary, said Tim Ghriskey, chief
investment strategist at Inverness Counsel in New York.
"The spike in commodity prices in particular, the shortage
of semiconductors and shipping resources, for example, is
worrying the market," Ghriskey said. "It's a value day or
cyclical day in the (equity) market."
MSCI's benchmark for global equity markets .MIWD00000PUS ,
which tracks stocks in 50 countries, rose 0.31% to 701.81. The
pan-European STOXX 600 index .STOXX closed 0.1% lower.
On Wall Street, the Dow Jones Industrial Average .DJI rose
0.43%, the S&P 500 .SPX gained 0.23% and the Nasdaq Composite
.IXIC dropped 0.2%.
The healthcare sector took a hit as vaccine makers fell
after President Joe Biden backed plans for patent waivers on
COVID-19 shots, but losses were capped by the upbeat jobless
claims report.
Shares in Pfizer Inc PFE.N , Moderna Inc MRNA.O , Johnson
& Johnson JNJ.N and Novavax Inc NVAX.O , all involved in the
making of COVID-19 vaccines, fell between 1.0% and almost 2%.
In Asia, Japan's Nikkei .N225 jumped 1.8% as it reopened
after a five-day holiday. Chinese shares also resumed trade for
the first time since last week and wobbled as the CSI300
.CSI300 fell 1.2%, led by falls in biotech firms.
The Canadian dollar hit a three-and-a-half year high versus
the greenback, helped by oil price gains and the Bank of
Canada's recent shift to more hawkish guidance CAD=D3 .
The Australian dollar fell sharply overnight when China said
it would stop its economic dialogue with Australia, but the
currency later recovered to trade about 0.3% higher AUD=D3 .
The Treasuries yield curve flattened for a fifth session, as
yields on the long end stalled amid increased investor demand
and as the Federal Reserve repeatedly affirmed its dovish
stance. The spread between U.S. 2-year and 10-year yields slid
to 140.8 basis points US2US10=TWEB .
"We're stuck in a battle," said Ellis Phifer, managing
director in fixed income research at Raymond James in Memphis,
Tennessee. "The growth story is leading to inflation, while the
Federal Reserve is jawboning, trying to keep expectations down,
which I think is the right thing to do."
U.S. yields briefly inched higher after data showed initial
claims for state unemployment benefits totaled a seasonally
adjusted 498,000 for the week ended May 1, compared to 590,000
in the prior week.
The dollar index =USD fell 0.301%, with the euro EUR= up
0.37% to $1.205.
The Japanese yen strengthened 0.09% versus the greenback at
109.10 per dollar.
Investors drew comfort from the latest economic data and
forecasts in Europe, which pointed to a recovery still on track.
Retail sales in the euro zone beat expectations with a 2.7%
rise in March as curbs on shoppers eased.
The Bank of England increased its forecast for Britain's
economic growth this year after its coronavirus slump.
Oil prices gave up initial gains despite crude stockpiles in
the United States, the world's largest oil consumer, falling
more sharply than expected.
Brent crude futures LCOc1 fell $0.50 to $68.46 a barrel.
U.S. crude futures CLc1 slid $0.55 to $65.08 a barrel.
The number of Americans filing new claims for unemployment
benefits fell below 500,000 last week for the first since the
COVID-19 pandemic started more than a year ago, signaling the
U.S. labor market recovery has entered a new phase amid a
booming economy. Friday's U.S. monthly jobs report is expected to show non
farm payrolls increased by 978,000 jobs last month and confirm
the economy's solid path to recovery.
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World FX rates YTD http://tmsnrt.rs/2egbfVh
Global asset performance http://tmsnrt.rs/2yaDPgn
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