Wall Street, dollar gains on Wells Fargo report

By Herbert Lash

NEW YORK (Reuters) - News that No. 4 U.S. bank Wells Fargo will report record first-quarter earnings sparked a rally on Wall Street and lifted the dollar on Thursday on hopes a sector that sparked the global financial crisis is healing.

Oil prices rose almost 6 percent, fueled by the equity rally and by data that showed the number of American workers filing new claims for unemployment benefits fell last week.

U.S. Treasury debt prices fell in an abbreviated session before the Easter weekend and U.S. gold futures finished with modest losses as rising expectations that economic recovery was on the horizon hurt the appeal of traditional safe-havens.

The rally in global stocks capped a fifth straight week of gains among the major U.S. stock indexes, including the Dow and S&P 500, and MSCI's world equity index.

Investor confidence got a boost early in the day when Japan's ruling party said it would increase long-term lending to companies by a government-affiliated bank by 8 trillion yen ($80 billion).

U.S. economic reports, including the jobless claims, gave investors more reason to cheer.

Data showing the U.S. trade deficit shrank in February to its smallest since November 1999 backed a view that the drop in first-quarter gross domestic product was probably not as steep as the previous period's 6.3 percent annual pace of decline.

But it was Well Fargo (WFC.N) that boosted sentiment the most after the San Francisco-based bank said it expects to report net income of about $3 billion for the first quarter.