Tech-Heavy Nasdaq bullish

NEW YORK : However U.S. Treasuries slipped, as relief at a smaller-than- expected debt auction was overtaken by awareness that the ever wider budget deficit would eventually take a toll on bonds.

And profit taking pulled COMEX gold off 7-month highs after a report showed speculators were still willing to gamble that bullion's bull market had further to run.

The Nasdaq Composite Index, IXIC rose 30.38 points, or 1.63 percent, to close at 1,888.62, its highest level since March 12, 2002. The blue-chip Dow Jones Industrial average, DJI ended up 82.95 points, or 0.87 percent, at 9,586.29 and the broader Standard & Poor's 500 Index, SPX rose 10.25 points, or 1.0 percent, to 1,031.64.

"We know the economics are getting better -- barring employment -- and we are two weeks away from earnings," said Peter Dunay, chief market strategist at brokerage Wall Street Access.

"The hope is that the earnings will show as much strength as the economic data. We have technical trading momentum and that feeds on itself," he added.

Although the dollar generally reflected this buoyant mood, it failed to sustain the two-week high against the yen it hit after Japanese authorities were again cited selling their currency for the greenback. The dollar was down 0.03 percent against the Japanese currency at 116.72 yen.

But against major European currencies, the dollar advanced on all fronts. The euro was at $1.1068 down 0.34 percent. The dollar rose 0.67 percent against the Swiss currency to 1.3908 francs and sterling also traded lower at $1.5824, down 0.37 percent on the day.

"It has been a slow trading day, although the market's focus right now is on the dollar-yen," said Kenneth Landon, senior currency strategist at Deutsche Bank in New York.

On the commodities markets, December gold ended down $2.50 at $376.20 an ounce, trading from $378.80 to $374.70, before steadying. Estimated volume was 35,000 contracts.

On Friday, gold surged to $380.90, its highest since Feb. 5 and within striking distance of February's peak of $391. Levels around $391 have not been seen since the middle of 1996.

NYMEX October crude oil ended 3 cents lower at $28.85 per barrel. October gasoline was up 0.18 cent at 86.33 cents a gallon, while October heating oil was off 0.13 at 75.86 cents.

Traders are keeping an eye on developments in Iraq, beset by delays in its return to the export market. Repairs to the country's oil pipeline to Turkey, damaged by saboteurs, would take at least five more weeks, a top U.S. Army official in Iraq said.

"If all goes well and there are no new incidents, then exports will start after three weeks of repairs and a further two weeks of testing," said Col. Robert Nicholson, head of engineers for the Fourth Infantry Division.

In Europe, insurers, technology and telecom groups lifted shares close to their highest levels for the year as investors seized on encouraging economic signs.

The FTSE Eurotop 300 index ended up 0.6 percent at 924.18 points, in light volume. The DJ Euro Stoxx 50 index closed 0.8 percent ahead at 2,635.6 points.

"We are seeing a little bit of a return of interest into non-traditional defensive sectors like telecoms," said Clive McDonnell, a strategist at Standard & Poor's Equity Research.

But share prices are stretched and a retreat is likely because much of the economic recovery is already factored into the market, analysts said.

In Tokyo, shares eked out gains on hope data this week would confirm a brighter economic outlook in Japan. The Nikkei average .N225 closed up 0.31 percent at 10,683.76 after falling as low as 10,562.78 at one point due to fears its recent rally had been too fast.

® Reuters