* Upbeat factory data pushes U.S. stocks up 2 percent
* Global equity gauge rises to nearly 2 month high
* Euro zone price data reinforces ECB easing expectations
* Dollar index rises to one-month high
(Updates data, prices, adds quote)
By Dion Rabouin
NEW YORK, March 1 (Reuters) - U.S. stocks led equity markets
around the globe to their highest in nearly two months on
Tuesday after U.S. factory and housing data came in better than
expected and oil prices rose.
Construction spending in the U.S. rose to the highest level
since October 2007 and a measure of the U.S. manufacturing
sector outpaced analysts' expectations across the board.
The data gave investors a greater sense of confidence and a
bigger risk appetite, said Michael James, managing director of
equity trading at Wedbush Securities in Los Angeles.
"The stimulus to better stock price action is signs that the
U.S. economy is, in fact, doing better," James said.
U.S. stock markets rose 2 percent in afternoon U.S. trading
with the S&P 500 posting its largest percentage gain since early
January. .N
The Dow Jones industrial average .DJI rose 323.17 points,
or 1.96 percent, to 16,839.67, the S&P 500 .SPX gained 39.69
points, or 2.05 percent, to 1,971.92 and the Nasdaq Composite
.IXIC added 111.72 points, or 2.45 percent, to 4,669.67.
A global gauge of equity markets .MIWD00000PUS rose more
than 1.6 percent, touching its highest level since Jan. 13.
European shares extended their strongest run of the year,
underpinned by the prospect of the European Central Bank adding
stimulus in the euro zone after soft factory data. The
FTSEurofirst 300 .FTEU3 gained nearly 1.5 percent. London's
FTSE 100 .FTSE rose 0.9 percent.
Stocks looked to continue a yearlong correlation with oil as
crude prices reversed an early negative turn and moved toward a
two-month high.
Brent LCOc1 , the global benchmark for crude oil, was up
0.6 percent $36.80 a barrel, after touching a session low at
$35.95. U.S. crude CLc1 was up 1.9 percent to $34.39 a barrel,
after an intraday low of $33.37.
Crude oil prices have risen in seven of the past 12
sessions.
The strong U.S. data also strengthened the dollar .DXY ,
which rose against a basket of major currencies to a one-month
high of 98.57.
The dollar rose more than 1 percent against the yen JPY= ,
rebounding after its worst month against the Japanese currency
since 2008.
The yen also suffered from Japan becoming the first G7
economy to sell a 10-year government bond at a negative yield,
meaning that investors are effectively paying rather than
getting paid to hold the country's bonds.
The euro EUR= fell to a one-month low against the dollar
and touched its lowest in almost three years against the yen
EURJPY= .
The benchmark 10-year Treasury note US10YT=RR was last
down 26/32 in price to yield 1.83 percent, up from 1.74 percent
late on Monday.
The U.S. manufacturing data also prompted investors to
strengthen their outlook on a possible U.S. interest rate
increase by year-end.
Fed funds futures on Tuesday implied traders see a 56
percent chance of the U.S. central bank raising rates at its
December policy meeting FFZ6 , higher than the 30 percent
chance on Monday and more than four times greater than the 12
percent chance seen a month earlier, according CME Group's
FedWatch program.
But traders still see only a 4 percent chance of the Fed
raising interest rates at its next meeting on March 16.