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Global stocks rise for 3rd day on GE, U.S. retail sales
* Gold jumps, Swiss intervention raise devaluation specter
* Oil rises 11 pct after deep fall over past two sessions
* Government debt prices rise as new issuance is accepted
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, March 12 (Reuters) - Stocks around the world rose for a rare third straight day on Thursday as U.S. retail sales sparked confidence and gold jumped after Switzerland intervened in currency markets, heralding a possible beggar-thy-neighbor policy war.
Oil jumped more than 11 percent, lifting energy shares on both sides of the Atlantic, after the better-than-expected U.S. sales data for February. Strong loan data from China also helped as investors speculated it could spur global growth.
U.S. stocks rallied about 4 percent, spurred by the slight dip in retail sales, which suggested consumer spending may be stabilizing [nN12352975] . Stocks also gained on relief that an S&P credit ratings cut in General Electric <GE.N> was just one notch and that no further cuts loomed.
Investors had feared the downgrade on GE -- a widely held stock that is viewed as an economic bellwether -- would be deeper or the outlook negative. [nN12349101] .
"The outlook was stable. That's very good news," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. "It wasn't quite as bad as it could have been."
GE shares jumped 12.7 percent.
The Dow Jones industrial average <.DJI> closed up 239.66 points, or 3.46 percent, at 7,170.06. The Standard & Poor's 500 Index <.SPX> gained 29.38 points, or 4.07 percent, at 750.74. The Nasdaq Composite Index <.IXIC> rose 54.46 points, or 3.97 percent, at 1,426.10.
The Swiss move to head off deflation by weakening the franc is the first by a big central bank. Analysts said it could push the European Central Bank to follow the "unconventional easing" measures of the U.S. Federal Reserve and Bank of England. For details, see [nLB459488]
The franc fell in its biggest one-day drop ever against the euro, as the intervention and interest rate cut by the Swiss National Bank went far beyond what analysts had expected.
Euro-zone government bonds shot higher after the Swiss central bank signaled it stood ready to buy fixed-income assets.
The dollar fell against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.62 percent at 87.326. Against the yen, the dollar <JPY=> rose 0.57 percent at 97.75.
The euro <EUR=> rose 0.76 percent at $1.2925.
The intervention suggested one of the world's safest currencies was deliberately weakened to help boost growth, which could lead other countries to follow.
"If all currencies are being devalued against each other then gold is a currency which is going to profit from it," Commerzbank analyst Eugen Weinberg said in Frankfurt.
Mark Chandler, a senior currency strategist at Brown Brothers Harriman in New York, said the intervention raised questions, even though it enjoyed immediate success.
The Swiss move comes ahead of a gathering of finance chiefs from the Group of 20 rich and developing economies near London this weekend that will likely include calls to avoid protectionism, a contributing factor in the Depression.
"It is troubling that a country with a current (account) surplus larger than 10 percent of GDP feels compelled to depreciate its currency," Chandler said.
European shares ended higher for a third straight session, with retailers rising on positive results by Morrison <MRW.L> and Delhaize <DELB.BR> .
The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.6 percent higher at 696.89 points.
U.S. Treasury debt prices climbed as robust demand for $11 billion of 30-year bonds soothed initial concerns about investors' ability to absorb another week of massive supply.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose 10/32 in price to yield 2.88 percent. The 2-year U.S. Treasury note <US2YT=RR> rose 1/32 in price to yield 1.00 percent.
Weak labor market data had weighed on U.S. government debt prices, while the GE downgrade, although expected, rattled investors and helped to support bonds.
New applications for state unemployment insurance benefits increased to a seasonally adjusted 654,000 in the week ended March 7, offsetting the positive aspects of retail sales.
[nN12352975]
"Clearly the consumer is not completely knocked out," said Michael Woolfolk, senior currency strategist at the Bank of New York-Mellon in New York.
"The difficulty, though, is we still need jobs growth and credit markets to thaw out before we can have a normal recovery."
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