Stocks gain on factory data, bund yields rise

By Herbert Lash NEW YORK (Reuters) - Global equity markets rose on Monday, lifted by the biggest gain in U.S. factory orders in eight months and solid manufacturing data in Germany, while German bund yields gained as investors shook off deflation fears. Trading volume was lighter than usual in most European markets because of a public holiday in Britain, home to the region's largest stock market and many large trading firms. Germany's Dax index closed up 1.4 percent to outperform its peers after euro zone factories raised prices for the first time in eight months, according to a survey that also showed headcount rose at the fastest pace in nearly four years. Along with a report from the European Central Bank last week that showed credit creation in Spain and Italy had picked up in March, the manufacturing data bodes well for inflation expectations in Europe, said Anastasia Amoroso, global markets strategist at J.P. Morgan Asset Management. "If there's credit creation then chances are there is jobs creation and therefore earnings creation," Amoroso said. "It is very good for stocks, absolutely." MSCI's all-world country index of equity performance in 46 countries rose 0.19 percent, while the euro zone's blue-chip Euro STOXX 50 index closed 0.48 percent higher at 3632.94 points. On Wall Street investors bought beaten-down healthcare stocks, while Berkshire Hathaway led finance stocks higher after its results beat forecasts. Berkshire rose 1.62 percent to $219,290.00 per share. The Dow Jones industrial average closed up 46.34 points, or 0.26 percent, to 18,070.4. The S&P 500 gained 6.19 points, or 0.29 percent, to 2,114.48, and the Nasdaq Composite added 11.54 points, or 0.23 percent, to 5,016.93. The yield on 10-year German bunds rose above 0.40 percent to levels last seen before the ECB began buying bonds earlier this year. It last traded at 0.447 percent. The U.S. Treasury 10-year note fell 8/32 in price to yield 2.1476 percent. The dollar edged higher after a two-week correction in thin trading on data suggesting the U.S. economy might be stabilizing following a soft patch in the first quarter. The greenback rose 0.13 percent against a basket of six major currencies. The euro was down 0.44 percent against the dollar at $1.1149. The greenback was slightly lower against the yen, down 0.03 percent at 120.12. Oil eased after reaching a 2015 high, as ample current supplies and weak Chinese factory activity countered expectations of a tighter supply and demand balance later this year. Brent crude settled down 1 cent at $66.45 a barrel. U.S. crude settled 22 cents lower at $58.93 a barrel. A business survey showed activity at China's factories shrank in April at the fastest pace for a year as new orders fell, hardening the case for policy stimulus to boost the world's second biggest economy. (Reporting by Herbert Lash; Editing by Meredith Mazzilli and Leslie Adler)