GLOBAL MARKETS-Stocks rally on virus vaccine hopes, dollar gains

(Adds U.S. market open, byline, dateline; previous LONDON)
* Nasdaq hits new high as stocks rally for third day
* Media reports about a virus vaccine boost sentiment
* U.S., European data also buoy investors

By Herbert Lash
NEW YORK, Feb 5 (Reuters) - The dollar gained and a gauge of
global equity markets surged for a third day as expectations of
more central bank stimulus and media reports that suggest
scientists are closing in on a vaccine for the deadly
coronavirus boosted sentiment.
U.S Treasury yields rose as traders welcomed early reports
that a Chinese university team found a drug to treat those
infected with the virus while UK researchers said they made a
"significant breakthrough" in finding a vaccine. The acceleration of euro zone business activity in January,
indicating the worst may be over for the bloc's economy, while
U.S. data showed an economy that is growing, albeit moderately,
also boosted risk appetite and doused a bid for safe havens.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.72%, about 1.3% from a record high set almost three
weeks ago. But the Nasdaq on Wall Street set a new high and the
benchmark S&P 500 was about four-tenths of 1% from a fresh
record.
Yousef Abbasi, global market strategist at INTL FCStone
Financial Inc in New York said stimulus efforts by China's
central bank and greater U.S. liquidity because of Federal
Reserve operations in the repo market have boosted risk assets.
"I have a tough time justifying why this market is trading
at 19 times earnings and why we have managed to snap back from
any sell-off since October," Abbasi said, regarding U.S. stocks.
"But at this point, looking at this market, it almost feels
like any hiccup further emboldens the global central bank put,"
he said, referring to central bank activity that increases
market liquidity and encourages risk taking.
The Dow Jones Industrial Average .DJI rose 311.47 points,
or 1.08%, to 29,119.1. The S&P 500 .SPX gained 26.62 points,
or 0.81%, to 3,324.21 and the Nasdaq Composite .IXIC added
24.13 points, or 0.25%, to 9,492.10. In Europe, the pan-regional STOXX 600 index .STOXX rose
1.19% and MSCI's gauge of stocks across the globe
.MIWD00000PUS gained 0.72%, while emerging market stocks rose
0.55%.
IHS Markit's final euro zone composite Purchasing Managers'
Index (PMI), seen as a good indicator of economic health, rose
to a five-month high of 51.3 in January from 50.9 the previous
month.
U.S. data also was encouraging.
The Institute for Supply Management (ISM) said its
non-manufacturing activity index increased to a reading of
55.5 in January, the highest level since August. Data for
December was revised slightly down to show the index at a
reading of 54.9 instead of the previously reported 55.0.
Readings above 50 indicate economic expansion.
The dollar gained against the safe-haven Japanese yen and
Swiss franc, as risk appetite rose on reports of a possible
treatment for the coronavirus.
The U.S. currency also benefited from a private-sector
payrolls report for January that surpassed market expectations,
suggesting the world's largest economy was on a stable growth
path and interest rate cuts were off the table for now.
U.S. private-sector payrolls increased by 291,000 in
January, according to the ADP National Employment Report, far
above expectations of an increase of 156,000 jobs. January's job
gains were the largest since May 2015. The dollar index .DXY rose 0.29%, with the euro EUR=
down 0.38% to $1.1. The yen JPM= weakened 0.15% versus the
greenback at 109.71 per dollar. Overnight in Asia, stringent containment measures, along
with the billions of dollars Chinese authorities have pumped
into the economy, boosted mainland China indexes more than 1%
.SSEC .CSI300 . The bourses have clawed back
half of the $700 billion in market capitalization that was wiped
out during Monday's almost 8% rout.
Oil prices jumped 4% after media reports highlighted a
potential vaccine, though the World Health Organization played
down the news, saying there are "no known effective
therapeutics" against the virus. Brent crude oil futures LCOc1 rose $2.07 to $56.03 a
barrel. U.S. West Texas Intermediate (WTI) crude CLc1 gained
$1.72 to $51.33.
Benchmark 10-year notes US10YT=RR fell 11/32 in price to
yield 1.637%.