* Upbeat factory data pushes U.S. stocks up 2 percent
* Global equity gauge rises to 2 month high
* Fed rate hike priced in by December
(Updates to U.S. market close)
By Dion Rabouin
NEW YORK, March 1 (Reuters) - Upbeat U.S. manufacturing data
and another jump in oil prices on Tuesday pushed a leading gauge
of global stocks to its highest in nearly two months.
U.S. stocks led the way, with bank shares up more than 3
percent after the strong data refreshed expectations that the
Federal Reserve may raise rates later this year.
U.S. construction spending rose to the highest level since
October 2007 and a measure of the U.S. manufacturing sector
outpaced analysts' expectations across the board.
"If the manufacturing sector is now rebounding, that's very
bullish," said Jonathan Lewis, chief investment officer at Fiera
Capital Inc in New York.
"The (manufacturing) data was an accelerant," he said.
The U.S. data, alongside expectations of further support
from major central banks, soothed fears over a slowing global
economy.
"That reminded people we have more central banks to come
this month, "Lewis said. "We get European Central Bank, Bank of
Japan and the Federal Reserve, so we're probably getting set up
for a nice middle of the month."
The Dow Jones industrial average .DJI rose 348.58 points,
or 2.11 percent, to 16,865.08, the S&P 500 .SPX gained 46.12
points, or 2.39 percent, to 1,978.35 and the Nasdaq Composite
.IXIC added 131.65 points, or 2.89 percent, to 4,689.60.
It was the largest daily percentage gain since early January
for the S&P 500. MSCI's global gauge of equity markets
.MIWD00000PUS rose 1.8 percent, touching its highest level
since Jan. 8.
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
58-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 tool.
CRUDE UP AGAIN
Oil prices followed equities higher and have risen in seven
of the past 12 sessions. Brent LCOc1 , the global benchmark,
was down 0.2 percent at $36.49 a barrel after settling up 0.7
percent at $36.81. U.S. crude CLc1 settled up 1.9 percent at
$34.40 a barrel and was last up 0.5 percent at $33.91.
Equities' surge pushed investors out of traditionally safe
assets like U.S. government bonds, gold and the Japanese yen.
The benchmark 10-year Treasury note US10YT=RR fell 25/32
in price to yield 1.825 percent, up from 1.74 percent late on
Monday.
The dollar rose more than 1 percent against the yen JPY= ,
rebounding after its worst month against the Japanese currency
since 2008.
Gold XAU= fell 0.5 percent to 1,231.67. It rose more than
10 percent in February, the most for any month in four years.