Wall St gains on recovery hopes, but job data looms

By Ellis Mnyandu

NEW YORK (Reuters) - Stocks rose on Wednesday, the start of the third quarter, as reassuring manufacturing data from China, Europe and the United States reinforced hopes that the world's economy is on the road to recovery.

A day after the benchmark S&P 500 wrapped up its best quarter in a decade, investors plowed new money into stocks, boosting growth-sensitive sectors like energy, industrials, technology, materials and consumer discretionaries.

But with the release of the all-important June non-farm payrolls data just a day away, some caution prevailed, causing indexes to finish sharply off their highs.

A weaker U.S. dollar underpinned stocks of multinational companies such as Coca-Cola (KO.N), up 2.5 percent at $49.18, as investors bet the U.S. currency's decline might boost overseas earnings. Coca-Cola is one of the best-known defensive stocks, which are shares of companies deemed better able to withstand an uncertain economy.

General Mills Inc (GIS.N), the maker of Cheerios cereal, also gave investors more reason to be optimistic about the economy after the food company forecast a stronger-than-expected annual profit, sending its stock up 3.9 percent to $58.18.

"There are clearly signs that we are emerging from the recession," said Maury Fertig, chief investment officer of Relative Value Partners in Northbrook, Illinois. "We think the economy has bottomed out and we'll see some positive GDP this quarter."

Even so, volume was light because of the absence of most market players in a holiday-shortened week. U.S. financial markets will be closed on Friday for the U.S. Independence Day holiday.

The Dow Jones industrial average .DJI rose 57.06 points, or 0.68 percent, to 8,504.06. The Standard & Poor's 500 Index .SPX gained 4.01 points, or 0.44 percent, to 923.33. The Nasdaq Composite Index .IXIC shot up 10.68 points, or 0.58 percent, to 1,845.72.