LONDON Feb 10 European shares rose to within
striking distance of their highest levels in more than a year on
Friday while the dollar was buoyant as investors cheered upbeat
Chinese trade data and hopes of business-friendly tax cuts in
the United States.
President Donald Trump said on Thursday that in coming weeks
he would announce something "phenomenal" in terms of tax
although he offered no further details.
Renewed speculation that Trump's economic policies will help
boost economic growth and inflation pushed U.S. Treasury yields
higher and lifted the dollar.
Strong Chinese trade numbers of Friday added to a sense that
inflationary pressures could be stirring.
Evidence of Chinese growth lifted shares of
commodity-related sectors, in particular blue chip mining,
across Europe helping regional indexes inch higher back towards
last month's peaks.
Europe's STOXX 600 rose 0.2 percent and was poised
to end the week about 1 percent higher.
Healthy corporate results and the continued uptick in
regional dealmaking which is seeing its strongest start to the
year in more than a decade also helped underpin valuations.
"President Trump promising tax reform in 2-3 weeks
(potentially at the Feb 28 address to Congress) has added to
risk bullish sentiment," said Morgan Stanley strategists in a
note to clients.
Wall Street's three main indexes notched record highs
Broad bullish sentiment was evident in investment flows too
with investors pumping $13 billion into bonds, $6 billion into
equities and even $2 billion into gold, in the past week
according to latest data from Bank of America Merrill Lynch and
fund tracker EPFR.
On the political front, Trump seemed to change tack and said
he would honour the longstanding "one China" policy during a
phone call with China's leader, a major diplomatic boost for
Beijing which brooks no criticism of its claim to neighbouring
Focus now shifts to a meeting later on Friday between Trump
and Japan's Prime Minister Shinzo Abe in which Abe is expected
to propose a new cabinet level framework for U.S.-Japan talks on
trade, security and macroeconomic issues, including currencies.
The dollar was up 0.3 percent against the yen, up
more than 1 percent for the week.
The dollar index, which tracks the greenback against a
basket of six major currencies, added 0.2 percent on the day to
100.8, on track to gain 0.8 percent for the week.
In commodities, crude oil prices extended gains supported by
strong Chinese crude imports and OPEC-led production cuts,
although ample U.S. fuel inventories still weighed on the
Brent crude futures LCOc1, the international benchmark for
oil prices, were trading at $55.68 per barrel at 0807 GMT, up 5
cents from their previous close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were
up 3 cents at $53.03 a barrel.
(Reporting by Vikram Subhedar; Editing by Toby Chopra)