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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Fuelling Change

REUTERS SHOWCASE

NSEL Fraud

NSEL Fraud

Govt orders Financial Tech to absorb NSEL, liabilities  Full Article 

Stalemate

Stalemate

WTO prepares for crisis talks as India keeps veto on global deal.  Full Article 

Deal Talk

Deal Talk

Smartphone repair company B2X steps up expansion with Indian deal.  Full Article 

Earnings Season

Earnings Season

HDFC Bank eyes pickup in corporate credit.  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

Iron Ore Imports

Iron Ore Imports

JSW Steel to boost iron ore imports by up to 80 percent.  Full Article 

Pollution Levels

Pollution Levels

Delhi braces for worst air quality this Diwali week.  Full Article 

Remembering Margerie

Remembering Margerie

Total’s "Big Moustache"- bon vivant, deal-maker and risk-taker .  Full Article 

Reuters India Mobile

Reuters India Mobile

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