Dollar climbs following upbeat data; Greece talks eyed

By Chuck Mikolajczak

NEW YORK (Reuters) – The U.S. dollar gained on Monday after a round of economic data kept expectations alive for an interest rate hike from the Federal Reserve this year, while the euro fell on worry about Greece’s financial crisis and soft euro zone data.

The strengthening dollar weighed on oil prices, which were also dented by expectations OPEC production would remain high.

U.S. stocks closed modestly higher in a choppy session as a deal by Intel Corp <INTC.O> to acquire Altera for $16.7 billion helped lift the technology sector.

While data showed U.S. consumer spending remained flat in April, construction spending and manufacturing picked up steam, holding views steady that the Fed will begin to hike interest rates by the end of the year.

“Investors are concentrating on some of the good economic news we had today, referring to the ISM manufacturing and construction spending, which was rather strong,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

“That is what is propelling stocks higher on this first day of the new trading month.”

Boston Fed President Eric Rosengren, a non-voting member of the central bank, said that while he would like to normalize rates as soon as possible, current U.S. economic conditions do not warrant a rate hike at this time, with the Greek debt crisis and a slowdown in China also concerns.

The data also sent yields on U.S. debt higher, as U.S. 10-year notes <US10YT=RR> fell 25/32 in price to yield 2.1811 percent.

The Dow Jones industrial average <.DJI> rose 29.69 points, or 0.16 percent, to 18,040.37, the S&P 500 <.SPX> gained 4.34 points, or 0.21 percent, to 2,111.73 and the Nasdaq Composite <.IXIC> added 12.90 points, or 0.25 percent, to 5,082.93.

The dollar index <.DXY> was up 0.51 percent at 97.395 after the greenback closed out May with a 2.4 percent climb, its tenth monthly gain in the last 11.

The euro <EUR=>, off 0.6 percent, lost ground after Greece failed to meet a self-imposed Sunday deadline to reach a deal with lenders, keeping the possibility open of a debt default and potential exit from the euro zone.

The chiefs of the European Central Bank and the International Monetary Funded headed to Berlin for talks late on Monday with the leaders of France and Germany on how to proceed with Greek debt negotiations.

The euro was also weakened by surveys that showed manufacturing activity remained soft, boosting expectations for central banks to continue to take steps to support growth.

Brent crude <LCOc1> settled down 68 cents at $64.88 a barrel, and U.S. crude <CLc1> settled off 10 cents at $60.20 a barrel.

MSCI’s all-country world index <.MIWD00000PUS> of the stock performance in 46 countries edged down 0.06 percent. The pan-European FTSEurofirst 300 <.FTEU3> closed up 0.06 percent at 1,587.29.

European equities managed to post a modest gain as stronger real estate and healthcare sectors offset weaker energy stocks, which fell in sympathy with crude oil prices.

(Reporting by Chuck Mikolajczak; Editing by Dan Grebler)

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