(Updates to U.S. market close)
* U.S. oil drops after White House comment on export ban,
then rallies
* U.S. 30-yr yield at near 2-mo high, 2-yr at four year high
* Yen slips, euro dips
By Rodrigo Campos
NEW YORK, Sept 15 (Reuters) - Stocks rose sharply on Wall
Street and in Europe on Tuesday, supported by growing U.S.
retail sales, though caution remained ahead of a possible rate
increase by the U.S. central bank later in the week, which would
be its first in nearly a decade.
The U.S. dollar index .DXY advanced the most in two weeks,
while U.S. oil CLc1 jumped more than 1 percent despite a burst
of selling after the White House said it would not support a
bill to end the 40-year-old ban on crude oil exports.
ID:nL1N11L1P2
Worries about slowing Chinese and global growth and the
prospect of higher U.S. borrowing costs have weighed on markets
for weeks. However, some expect the Fed to hike rates as a
confirmation that the U.S. economy no longer needs supportive
measures from the central bank.
The U.S. benchmark S&P 500 index .SPX rose the most in a
week but volume on U.S. exchanges was low, with about 5.8
billion shares changing hands, compared with the 8 billion daily
average in the last 20 sessions. Traders say low volume helps
exaggerate the magnitude of daily moves.
"You're clearly in a wait-and-see mode. The market picked a
direction and it's hard for anyone to get in the way, that's
where the low volume matters," said Art Hogan, chief market
strategist at Wunderlich Securities in New York.
He said if the Fed does not raise rates this week the market
will likely see it as a sign of a weakened economy.
The Dow Jones industrial average .DJI rose 228.89 points,
or 1.4 percent, to 16,599.85, the S&P 500 .SPX gained 25.06
points, or 1.28 percent, to 1,978.09 and the Nasdaq Composite
.IXIC added 54.76 points, or 1.14 percent, to 4,860.52.
The pan-European FTSEurofirst 300 .FTEU3 index ended up
0.85 percent and MSCI's gauge of major equity markets globally
.MIWD00000PUS gained 0.75 percent.
Ahead of the open in Tokyo, Nikkei futures NKc1 rose 1.4
percent.
Overnight, Shanghai stocks fell 3.55 percent .SSEC as
growth concerns in the world's second-largest economy linger.
RISK ON, FOR NOW
The Commerce Department said U.S. consumer spending grew at
a fairly healthy pace over the past two months, but factory
production slipped in August, providing the Fed a mixed economic
picture before its policymakers meet on Wednesday.
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Trading in U.S. Treasuries was thin ahead of the Fed
meeting, but prices stumbled after the retail sales data and as
risk appetite rose. A rise in German Bund yields also pushed
U.S. yields higher.
U.S. 30-year Treasury bonds US30YT=RR were last down
2-8/32 in price to yield 3.062 percent, from a yield of 2.946
percent late Monday. Benchmark 10-year Treasury notes
US10YT=RR were last down 29/32 in price to yield 2.283
percent, from a yield of 2.18 percent late Monday.
Two-year Treasury yields fell 5/32 in price to yield 0.8065
percent, the highest since April 2011.
"What you are seeing is thin volumes as a solid portion of
the market is awaiting the outcome of the Fed meeting," said
Matthias Rusinski, U.S. rates strategist at UBS in New York.
The yen JPY= , a traditional safe haven, fell 0.2 percent
at 120.43 per dollar after rising as much as 0.7 percent
earlier. The Bank of Japan held policy steady at the end of a
two-day meeting. ID:nL4N11L18G
The euro gave up about 0.4 percent against the greenback at
$1.1270 EUR= . The dollar index gained 0.37 percent, the most
for any day since Sept. 3.
U.S. crude futures prices CLc1 jumped 2.3 percent to $45
a barrel while Brent LCOc1 added 0.5 percent at $46.60. Copper
CMCU3 gained 0.7 percent to $5,346.85 a tonne.
(Editing by Chizu Nomiyama and Dan Grebler)