GLOBAL MARKETS-Stocks and dollar gain on U.S. retail sales, drug trial

(Updates to close of U.S. markets, gold settlement price)
* Equities rally as stimulus soothes second wave worries
* U.S. retail sales tally record rebound
* Bank of Japan increases support for cash-strapped firms
* Oil surges, dollar strengthens
* Treasury and Bund yields edge higher
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Herbert Lash and Marc Jones
NEW YORK/LONDON, June 16 (Reuters) - Risk appetite found new
life on Tuesday on a record rebound in U.S. retail sales, fresh
support from the Federal Reserve and Bank of Japan, and upbeat
trial results for a COVID-19 treatment, driving global equity
markets higher and boosting the dollar.
U.S. Treasury yields rose, as did demand for lower-rated
southern European debt on the upbeat sentiment, although
safe-haven gold was spurred higher in see-saw trade on a fresh
coronavirus outbreak in China.
A near 5% jump overnight by Japan's Nikkei .N225 gave Asia
.MIAP00000PUS its best day since late March, while the major
European bourses surged around 3%. It was a broad rally, with no
declines among the 30 components of Frankfurt's DAX .GDAXI ,
only one decline on the CAC40 .FCHI in Paris, and three of the
109 components of the FTSE 100 .FTSE in London. Wall Street
also surged, though not as much.
U.S. retail sales jumped the most on record in May, new
evidence that the recession triggered by the coronavirus
pandemic might be drawing to an end, while trial results showed
dexamethasone, a cheap and widely used steroid, reduced death
rates by about one-third among the most severely ill COVID-19
patients. A report overnight said the Trump administration was
preparing a nearly $1 trillion infrastructure proposal in
another stimulus boost, after the Federal Reserve on Monday said
it would start buying corporate bonds to inject liquidity.
"It looks like we bounced back nicely in May for retail
sales, which is good news. The drug results are very good news,
and then the spending package is good news," said Patrick Leary,
chief market strategist at debt underwriter Incapital.
"All this stuff is bullish for stocks, bullish for corporate
bonds," Leary said. "Congress has the ability to support the
economy through their spending powers, the Fed is doing what it
can through its lending powers."
Fed Chair Jerome Powell told U.S. lawmakers Tuesday as he
began the first of two days of testimony that a full economic
recovery will not occur until Americans are sure the coronavirus
epidemic has been brought under control.
"The medical news trumps the economic news," Leary said. "No
one's worried about the underlying issues in the economy -
they're worried about COVID-19."
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 2.26%, while the pan-regional FTSEurofirst 300 index
.FTEU3 closed up 2.90% and emerging market stocks rose 2.32%.
The Dow Jones Industrial Average .DJI rose 526.82 points,
or 2.04%, to 26,289.98. The S&P 500 .SPX gained 58.15 points,
or 1.90%, to 3,124.74, and the Nasdaq Composite .IXIC added
169.84 points, or 1.75%, to 9,895.87.
Advancing stocks outpaced decliners by more than 4:1 on the
New York Stock Exchange, and by more than 3:1 on Nasdaq.
News elsewhere contributed to the bullish sentiment.
Germany's monthly ZEW investor sentiment survey showed
investors are confident that Europe's largest economy will be
over the worst of the coronavirus impact by the end of the
European summer. The dollar was mostly stronger, with the euro EUR= down
0.55% to $1.126 and the Japanese yen JPY= up 0.01% at 107.32.
The British pound GBP/ rose on unemployment numbers that
were not as bad as feared and friendlier Brexit talks.
The Bank of Japan increased its lending packages for
cash-strapped firms to $1 trillion from about $700 billion,
while keeping rates steady, sticking to its view that the
Japanese economy will gradually recover from the pandemic.

The yield on the benchmark U.S. 10-year Treasury notes
US10YT=RR rose 4.7 basis points to 0.7495%.
German, French, Dutch and other core yields also rose.
Riskier Italian yields fell to their lowest level since the end
of March, and the iTraxx European crossover index, which
reflects the cost of insuring against junk-rated corporate bond
defaults, fell to its lowest level in six days ITEX05Y=MG .
GVD/EUR
"In the absence of a further surge in new (coronavirus)
infections in China or the U.S., the market hopes about monetary
and fiscal tailwinds alongside improving sentiment indicators
should prevail," Commerzbank strategists wrote.
Oil prices surged in volatile trade as Wall Street rose, and
the International Energy Agency (IEA) increased its oil demand
forecast for 2020. Gains were capped by worries about a second
wave of coronavirus cases.
Brent crude futures LCOc1 ended the session up $1.24, or
3.1%, at $40.96 a barrel while U.S. West Texas Intermediate
crude (WTI) CLc1 rose $1.26, or 3.4% to settle at $38.38 a
barrel.
U.S. gold futures GCcv1 settled 0.5% up at $1,736.50 an
ounce.

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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
S&P 500 market cap, daily moves https://tmsnrt.rs/2YCDodm
Asset performance vs outbreak https://tmsnrt.rs/2YF3T1T
Stocks and oil versus COVID-19 cases https://tmsnrt.rs/3cXWNdO
Asia stock markets https://tmsnrt.rs/2zpUAr4
Global markets on the recovery run https://tmsnrt.rs/2UNKMS4
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