GLOBAL MARKETS-Stocks rally, yuan surges as investors bet on China revival

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* China's yuan jumps in biggest gain since December
* Chinese blue chips soar to highest in five years
* European shares gain in China economic rebound hopes
* Wall Street rises as data spurs recovery hopes

By Herbert Lash
NEW YORK, July 6 (Reuters) - Global stock markets rallied
and China's yuan posted its biggest gain since December on
Monday as investors bet the Chinese economy would boost global
growth even as surging coronavirus cases delayed business
re-openings across the United States.
Data showing unexpected growth in the U.S. services sector
last month, almost returning to its pre-COVID-19 pandemic
levels, helped drive Wall Street higher and lift Brent crude
futures, the global benchmark for oil. The yuan led commodity currencies higher against the dollar
as investors lapped up risky assets on growing expectations of a
strong economic rebound in China, where an index of blue-chip
Chinese shares .CSI300 soared to its highest in five years.
A Chinese economic revival bodes well for Australia and
Europe, which count Beijing as their biggest trading partner.
The euro EUR= was up 0.64% at $1.1320 and European shares
jumped. The broad FTSEurofirst 300 index .FTEU3 added 1.39% as
stocks exposed to China -- carmakers .SXAP , industrials
.SXNP , energy firms .SXEP and luxury goods makers -- rose
strongly. Banks .SX7P also rallied. .EU
Stephen Gallo, European head of FX strategy at BMO Financial
Group, said the rally in Chinese stocks was the big catalyst.
"The only caveat is that China's economy is not driven
purely by free-market forces. But if regulators in China are
engineering a stronger equity market, it can still feed through
to the rest of the world."
China's offshore yuan CNH=EBS was on track for its best
day against the dollar since Dec. 12, up 0.76 at 7.0148.
Chinese blue chips .CSI300 jumped 5.7% on top of a 7% gain
last week to their highest in five years. Even Japan's Nikkei
.N225 , which has lagged due to a soft domestic economy, rose
1.8%.
MSCI's All-Country World Index .MIWD00000PUS , a gauge of
equity performance in 49 countries, rose 1.78%. Emerging markets
rose 2.71%, their biggest single-day gain in three months.
On Wall Street, the Dow Jones Industrial Average .DJI rose
371.38 points, or 1.44%, to 26,198.74. The S&P 500 .SPX gained
46.84 points, or 1.50%, to 3,176.85 and the Nasdaq Composite
.IXIC added 218.20 points, or 2.14%, to 10,425.83.
A slew of upbeat U.S. data, including a record rise in June
payrolls last week, has powered the Nasdaq .IXIC to fresh
all-time highs and lifted stock markets around the world on
recovery hopes.
But a resurgence of coronavirus cases in the United States
has clouded the future. In the first five days of July, 16
states reported record increases in new cases of COVID-19, which
has infected nearly 3 million Americans and killed more than
130,000, according to a Reuters tally. U.S. Treasury yields were higher on Monday as investors
priced in auctions this week that will increase the supply of
the low-risk debt.
The benchmark 10-year US10YT=RR yield was up 2.5 basis
points to yield 0.7006%. German 10-year yields traded at
-0.469%.
Oil prices were mixed, with Brent crude edging higher on
tighter supplies and positive economic data, while U.S.
benchmark WTI futures dropped on concern that a spike in
coronavirus cases could curb fuel demand in the United States.
Brent crude LCOc1 was up 42 cents, or up 0.98%, at $43.22
a barrel. U.S. crude CLc1 was up 15 cents, or up 0.37%, at
$40.80 per barrel.
Spot gold traded at $1,776.21 per ounce XAU= , just off
last week's peak of $1,788.96. GOL/


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