By Herbert Lash
NEW YORK (Reuters) - The dollar rose and equity markets rallied on Monday as investors welcomed upbeat manufacturing data from around the world and as Microsoft's pursuit of TikTok's U.S. operations and other deals bolstered sentiment.
Gold prices retreated from a record high after some profit-taking and the dollar's strengthening, though concerns about the coronavirus' toll on the economy limited bullion's losses.
Oil prices rose as manufacturing data from the United States, Europe and China offset oversupply fears fueled by the prospect of the Organization of the Petroleum Exporting Countries and its allies winding back output cuts.
MSCI's benchmark for global equity markets <.MIWD00000PUS> rose 0.79% to 556.26. Europe's broad FTSEurofirst 300 index <.FTEU3> closed up 2.1% at 1,413.87, lifted by a reading of IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) for the euro zone.
The index bounced to 51.8 in July, its first time above the 50 mark separating growth from contraction since January 2019.
Manufacturing activity in China expanded at the fastest pace in nearly a decade as domestic demand improved, China's Caixin/Markit PMI showed, suggesting the world's second-largest economy would help cushion the pandemic's blow to world growth.
In the United States, manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, the Institute for Supply Management said.
"There's good feelings in the stock market. You're seeing that with earnings and you're seeing that with some of the PMI numbers," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. "People were really expecting the worse. Things are bad, but not as bad as predicted."
Wall Street's advance was driven by Microsoft <MSFT.O>, whose shares rose 5.6% after it formally declared interest in TikTok's U.S. operations on Sunday, Meckler said.
ADT <ADT.N> surged 57% on news that Alphabet's <GOOGL.O> Google was buying a nearly 7% stake in the home security firm for $450 million in a deal that will allow it to provide service to customers of its Nest home security devices.
"Investors are going with what's worked for them and they've decided technology has survived what they see as the worst of the pandemic," Meckler said.
The Dow Jones Industrial Average <.DJI> rose 0.89%, the S&P 500 <.SPX> gained 0.72% and the Nasdaq Composite <.IXIC> advanced 1.47% to set a record closing high.