Chinese, U.S. data push world shares to 20-month high

LONDON Fri Jan 18, 2013 2:04pm IST

An investor smiles in front of an electronic board showing stock information at a brokerage house in Taiyuan, Shanxi province January 18, 2013. REUTERS/Stringer

An investor smiles in front of an electronic board showing stock information at a brokerage house in Taiyuan, Shanxi province January 18, 2013.

Credit: Reuters/Stringer

Related Topics

Stocks

   

LONDON (Reuters) - World shares hit a 20-month high on Friday as encouraging data from the United States and China boosted prospects for the global economy, while the yen hit new lows ahead of next week's Bank of Japan meeting.

China's economy grew at a slightly faster-than-expected 7.9 percent in the fourth quarter of 2012, the latest sign it is pulling out of a post-global financial crisis slowdown that produced its weakest year of economic growth since 1999.

The positive news came on top of strong U.S. labour and housing market reports on Thursday, providing fresh impetus to a recent strong and broad financial market rally.

MSCI's index of leading world shares was at it highest level since May 2011 at 551.90 points as trading got underway in Europe and after Tokyo and Hong Kong stock markets surged and the S&P 500 in New York hit a five-year high.

"We've got good numbers out of China, we had some good numbers out of U.S. yesterday ... The general sentiment is pretty good," said Neil Marsh, strategist at Newedge.

"There will probably be some phases of consolidation as we go forward, but the markets remain pretty resilient. More people are putting their cash to work now in riskier assets like equities, and there is no sign of that stopping at the minute."

European stocks opened higher, with London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX up between 0.2 and 0.3 percent. The region's data highlight of the day comes from British retail figures.

Industrial commodities jumped, leaving platinum and palladium near multi-month highs hit on Thursday, while oil prices edged up, with U.S. crude up 0.1 percent at $95.61 a barrel and Brent futures adding 0.2 percent to $111.27.

YEN SLIDE RESUMES

The strong U.S. data and mounting expectations for more aggressive easing by the Bank of Japan (BOJ) next week lifted the dollar to its highest since June 2010 of 90.21 yen, and the euro to its peak since May 2011 of 120.73 yen.

The single currency was steady against the dollar at $1.3378.

Expectations that the new Japanese government will pursue massive fiscal spending and push for more aggressive BOJ easing to drive Japan out of years of deflation and economic slump have spurred heavy yen selling since November.

Sources told Reuters the BOJ will at its January 21-22 meeting consider removing the 0.1 percent floor on short-term interest rates and commit to open-ended asset buying until the 2 percent inflation target is reached.

In bond markets, German two-year government bond yields rose 0.25 percent to near their highest in nearly 10 months, with traders citing growing concerns in money markets over early bank repayments of three-year European Central Bank loans.

Banks can start making repayments on January 30, and the ECB will publish how much will be repaid then on January 25. A larger-than-expected repayment of around 400 billion euros would effectively tighten conditions and push up interbank rates.

(Reporting by Marc Jones; Editing by Will Waterman)

FILED UNDER:

Politics of Religion

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage