GLC says dollar to thrive in 2010

By Simon Falush

LONDON (Reuters) - The dollar, U.S. equities and emerging market currencies like the Mexican peso should thrive in 2010 as the global economy recovers, but European equities will be pressured by a strong euro, hedge fund GLC said.

The $315 million (194 million pound) GLC Global Macro hedge fund is long on the U.S. dollar versus the euro and yen on the view that the U.S. market is better positioned for recovery, Steven Bell, who co-manages the fund, told Reuters.

It is also upbeat on the Korean won and last week took an overweight position in Taiwan as this economy also looks set to benefit from the improving global economic outlook.

GLC as a whole manages around $1.5 billion in assets. The fund gained 24.7 percent for the 12 months to September, outperforming the Global Lipper benchmark by 4.5 percent.

"We think the whole level of earnings for next year is going to be revised up," Bell said.

"With no inflation in sight, there's no reason why stock markets shouldn't continue to strengthen."

A global stocks rally -- founded on the belief the economy is recovering -- has proved bad news for the dollar since March, but Bell said the fund had now gone short on a very strong euro and, as a result, European equities.

"The strength of the euro does cast a shadow over the stock market," he said. "It has been going up, profitability has seen significant improvement but I do think the outlook for the European stock market is not as rosy for the United States."