(Updates prices throughout, adds commentary)
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ECB raises rates to two decade high of 3.5% as expected
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Fed signals two more rate hikes before end of year
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Investors eye soft landing from jobless claims, retail sales
By Sinéad Carew and Marc Jones
NEW YORK, LONDON June 15 (Reuters) - MSCI's global index of stocks rose on Thursday to its highest level since April 2022 on strong U.S. economic data, but the dollar slid after the European Central Bank raised interest rates a day after the Federal Reserve paused its hikes.
While U.S. jobless claims were higher than expected, retail sales unexpectedly rose in May as consumers stepped up purchases of motor vehicles and building materials, which could help to stave off a recession in the near term.
The euro hit a 15-year peak against the Japanese yen and a fresh four-week high against the dollar after the ECB lifted interest rates to a two-decade high of 3.5% and eyed more hikes ahead.
Equities trading was choppy on Wednesday after the Fed signaled it could follow its June pause with two more rate increases this year. But by Thursday afternoon the S&P 500 and the Nasdaq had rallied to 14-month highs on upbeat economic data.
Higher jobless claims helped fuel bets that the Fed would not follow through with more rate hikes. This, combined with higher-than-expected retail sales, looked like "the ingredients for a soft landing" for the U.S economy, said Irene Tunkel, chief US equity strategist at BCA Research.
"It's almost like a sweet spot," Tunkel said, also pointing to Chinese data boosting energy stocks and oil prices. "So, sentiment-wise the mood is positive."
The Dow Jones Industrial Average was up 447.13 points, or 1.32%, at 34,426.46; while the S&P 500 rose 56.06 points, or 1.28%, to 4,428.65. The Nasdaq Composite added 166.26 points, or 1.22%, at 13,792.74.
MSCI's gauge of stocks across the globe gained 1.04%.
In currencies, the dollar index fell 0.787%, with the euro up 1.06% at $1.0946.
The Japanese yen weakened 0.18% versus the greenback at 140.30 per dollar, while Sterling was last trading at $1.2779, up 0.93% on the day.
U.S. Treasury yields on benchmark 10-year notes fell 7 basis points to 3.728%, from 3.798% late on Wednesday. The 30-year bond was last down 3.3 basis points to yield 3.8485%, from 3.881%. The 2-year note fell 5.9 basis points to yield 4.6481%.
In commodities, oil prices rose as the dollar weakened and data showed a jump in refinery runs in top crude importer China, though a weak economic backdrop capped gains.
U.S. crude settled up 3.44% at $70.62 per barrel and Brent was at $75.67, up 3.37% on the day.
Gold prices rose from a three-month low as the dollar and bond yields fell after U.S. economic data, although worries over more Fed rate hikes capped gains.
Spot gold added 0.7% to $1,957.08 an ounce. U.S. gold futures gained 0.18% to $1,958.80 an ounce.
(Additional reporting by Sinéad Carew in New York, Marc Jones in London, Tom Westbrook in Singapore; Editing by Mark Potter, Alexander Smith and Richard Chang)
