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Global gains in manufacturing boost economic optimism -- and the price of oil

April 1, 2010 | 11:25 am

The second quarter kicked off Thursday with a barrage of upbeat economic data worldwide, and that has powered stock market rallies nearly everywhere.

But on Wall Street the day’s gains have faded ahead of Friday’s government report on March employment -- and in the face of another jump in oil prices.

Stocks rose across Asia overnight on news that an index of Chinese manufacturing activity rose in March after two straight monthly declines. Also, the Bank of Japan’s quarterly survey of major manufacturers registered the least pessimism since 2008.

Manufacturing activity in Europe also improved in March, according to another data report.

Key stock indexes jumped 1.2% in China, 1.4% in Japan, 1.3% in Germany and 1.2% in Britain. Strength in overseas markets also boosted foreign currencies against the dollar. The greenback’s weakness, in turn, has given traders a reason to move into commodities, including oil.

Near-term crude futures in New York were at a new 17-month high, up 97 cents to $84.73 a barrel at about 11:15 a.m. PDT. The price is up nearly 6% just this week.

In the U.S., the Institute for Supply Management’s index of manufacturing activity rose to 59.6 in March, the highest since 2004 and up from 56.5 in February. Any reading above 50 indicates growth.

Stocks opened higher on Wall Street, adding to the first quarter’s advance. But the rally has largely evaporated. The Dow Jones industrials were up 49 points, or 0.4%, to 10,905 at about 11:15 a.m.

Some investors and traders may be reluctant to step in ahead of the government’s report Friday on March employment. Economists’ consensus estimate is for a net addition of about 180,000 jobs for the month, which would be the largest gain since March 2007.

But the stock market won’t have the opportunity to respond to the employment number on Friday, good or bad: U.S. equity markets will be closed in observance of Good Friday.

The bond market will be open Friday for a shortened session, however. Treasury bond yields were modestly higher Thursday, reacting to the stronger economic data. The 10-year T-note yield was at 3.86%, up from 3.83% on Wednesday.

-- Tom Petruno