By Herbert Lash
NEW YORK (Reuters) - Global stocks rose and bonds weakened on Monday after a U.S. home improvement retailer's profit spurred hopes an economic recovery may be closer than previously thought, boosting risk appetite.
The rally in equities -- European stocks surged more than 2 percent while U.S. shares jumped about 3 percent -- and rising oil fuelled the view that the global downturn may be slowing.
Crude prices rose nearly 5 percent to a six-month high as violence in top African top crude exporter Nigeria and a fire at a key U.S. East Coast refinery revived supply concerns.
The equity surge and an initially weaker dollar also helped spur oil's gains.
The U.S. dollar rose against the yen after comments by a top official in Japan spurred speculation of intervention by authorities to curb further strength in the Japanese currency.
Treasury debt prices eased as U.S. and European stocks rallied, slamming demand for safe-haven government bonds.
"We begin to see evidence that we're moving from a slower rate of negative change to positive growth, and I think there is more room for this to run on the upside," said Craig Hester, chief executive of Hester Capital Management in Austin, Texas.
Lowe's Cos Inc <LOW.N>, the second largest U.S. home improvement store chain, reported stronger-than-expected quarterly profit and raised its full-year forecast, boosting shares in the housing and retail sectors.
The Dow Jones industrial average <.DJI> closed up 235.44 points, or 2.85 percent, at 8,504.08. The Standard & Poor's 500 Index <.SPX> gained 26.83 points, or 3.04 percent, at 909.71. The Nasdaq Composite Index <.IXIC> added 52.22 points, or 3.11 percent, at 1,732.36.
Also supporting the gains was a private survey that showed U.S. homebuilder sentiment jumped to its highest level in eight months in May, suggesting the three-year housing slump might be poised to turn around.
"Lowe's numbers come at a time when the market is looking to rebound. It does show that consumer spending in general has been a bit stronger than many had anticipated," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
Financial stocks climbed on hopes that recession in key global economies was abating, while energy stocks tracked the price of crude oil higher.
Positive broker comments on stocks, including Bank of America Corp <BAC.N>, underpinned the market. The largest U.S. bank's stock was up 9.9 percent to $11.73.
The FTSEurofirst 300 <.FTEU3> index of top European shares closed 2.4 percent higher at 859.88 points.
Nigerian militants said they blew up two oil and gas pipelines in the Niger Delta and would blockade waterways in the region in an effort to disrupt energy exports from the member of the Organisation of Petroleum Exporting Countries.
U.S. crude for June rose $2.69 to $59.03 a barrel -- the highest settlement since November 11. London Brent for July rose $2.49 to $58.47.
The yen retreated from a two-month high near 94.50 to the dollar and slid versus other currencies. Japan's vice finance minister, Kazuyuki Sugimoto, said he was watching foreign exchange market moves carefully, and he hoped they would not have a negative effect on the economy.
Against the yen, the dollar rose 1.25 percent at 96.38. The euro added 0.42 percent at $1.3548.
The dollar fell against a basket of major currencies, with the U.S. Dollar Index <.DXY> off 0.44 percent at 82.586.
The benchmark 10-year U.S. Treasury note fell 25/32 in price to yield at 3.23 percent. The 2-year U.S. Treasury note fell 3/32 in price to yield 0.91 percent.
New York gold futures ended 1 percent lower as a Wall Street rally lessened safe-haven demand. Gold for June delivery settled down $9.60 at $921.70 an ounce in New York.
Copper closed 2.7 percent higher, sparked by the Wall Street rally and in anticipation of improved housing data from the United States. Copper for July delivery rose 5.45 cents to settle at $2.0720 a lb.
Most Asian stock markets fell overnight on concerns about corporate profits and uncertainty over the global economy, but Indian shares surged after the ruling coalition's sweeping election victory on Sunday.
India's benchmark 30-share BSE index <.BSESN> surged more than 17 percent before trading was halted, pulling the MSCI index of Asian stocks outside Japan <.MIAPJ0000PUS> to a 1.2 percent gain, although most individual markets fell.
Japan's Nikkei average <.N225> fell 2.5 percent.
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(Reporting by Ellis Mnyandu, Richard Valdmanis, Wanfeng Zho and Ellen Freilich in New York; Atul Prakash, Ian Chua, Rebekah Curtis and Jan Harvey in London; writing by Herbert Lash; Editing by Kenneth Barry)