GLOBAL MARKETS-European stocks hit highest since 2008
GLOBAL MARKETS-European stocks hit highest since 2008
Wed Mar 6, 2013 8:07am EST
* Stimulus hopes help European shares hit 4-1/2 year high * MSCI world share index just under June 2008 high * Wall Street expected to open up, Dow to hit new all-timehigh * Euro dips as traders mull ECB rate cut chances By Marc Jones LONDON, March 6 (Reuters) - European stock markets rose totheir highest since the 2008 financial crisis on Wednesday,helped by signs the U.S. economy is improving and expectationsof more pledges of support for growth from major central banks. U.S. stock index futures also pointed to fresh gains onWall Street, after the previous session's stellar run saw theDow Jones Industrial Average hit an all-time high. The European Central Bank, the Bank of England and the Bankof Japan are all expected to stick to ultra-easy monetary policyat meetings this week, following on from reassurances by U.S.Federal Reserve officials that their stimulus programme remainsin place. Analysts even see some scope for fresh action in Europe onThursday, giving a 40 percent chance for more bond buying fromthe Bank of England and a 10 percent likelihoodof an interest rate cut from the ECB. That, combined with some encouraging U.S. economic data thisweek and China's promise of record government spending to helpsustain growth, pushed world and European shareindexes higher on Wednesday. "It's panic buying," said Nick Xanders, who heads upEuropean equity strategy at BTIG. "At this stage everyone wantsto buy it, everyone wants to get involved, and everyone isscared of underperforming." The pan-European ESTOXX 50 was up 0.5 percentahead of the start of U.S. trading as Frankfurt's DAX jumped 1 percent and London's FTSE 100 and Paris'sCAC-40 added 0.2 percent. Those gains, coupled with a rise in Asian shares overnight,pushed the MSCI world index up 0.3 percent andjust short of a new 4-3/4 year high. "Indexes are breaking above big resistance levels, and thisis creating room on the upside," said Lionel Jardin, head ofinstitutional sales at Assya Capital, in Paris. "The sentiment is that central banks are going to remainvery accommodative for a while, and at the same time companiesare in really good shape, with strong cashflows." EUROPEAN OUTLOOK Still, with the ECB's meeting in view and worries over theeuro zone's debt crisis again on the rise due to Italy'spolitical deadlock, German government bonds recovered some poiseafter a sell-off in the previous session. The Bund future was flat on day at 145.06 afterdropping by around half a point on Tuesday, while Italian andSpanish government bonds also saw minor gains. Italian centre-left leader Pier Luigi Bersani, whose PDparty won most votes in last week's inconclusive election,presents his policy plans to his party later. It could besignificant if he produces enough to draw support from populistleader Beppe Grillo's Five Star Movement. After a steady start, the euro was down 0.1 percentagainst the dollar at $1.3030 at 1250 GMT as traders waited tosee whether the recent disappointing euro zone data and ongoingdebt worries would be enough to see the ECB surprise consensusand cut rates on Thursday. As expected, official data confirmed the euro zone ended theyear in its second recession since 2009. Eurostat fleshed outits numbers, showing Germany as the only major euro zone economyto grow in the quarter, at a crawl, while France, Spain andItaly all contracted. "There's reasonable downside to the euro. The situation inItaly is still uncertain," said Bill Diviney, currencystrategist at Barclays. "Although we don't expect any big changes to PresidentDraghi's stance, he's going to stay fairly dovish, givenuncertainties," he added. COMMODITIES DRIFT The dollar, meanwhile, was slightly higher asinvestors awaited U.S. jobs and factory orders data to confirmexpectations of a revival in demand growth following recentupbeat economic data from the U.S. and China. Economists in a Reuters poll expect the ADP employmentfigures due at 1315 GMT to show 170,000 jobs were created inFebruary versus 192,000 new jobs in January. That will alsoprovide a pointer for "non-farm payrolls" data on Friday. Growth-linked currencies were another beneficiary of thebroader improvement in sentiment. The Aussie dollar rose 0.2 percent to $1.0280 as data showing moderate economicgrowth helped it extend its recovery from Monday's $1.0116eight-month low. Commodity markets were more mixed, however, following sharprises in the previous session. Despite the increasingly positive mood, there are still someareas of concern, namely the Chinese government's move to coolthe country's overheated property market, the possible economicimpact of U.S. spending cuts, and the deadlock in Italy. Brent oil fell back towards $111 a barrel followingnews of Venezuelan President Hugo Chavez's death, copper traderstook profits after two days of gains, while gold edged up0.2 percent to $1,575 an ounce. "In the next few days, central bank meetings are on theagenda, and after some economic indicators have surprised to thedownside in February, market participants expect renewedassurance that monetary policy will remain expansionary forquite some time," Credit Suisse said in a note.
http://www.reuters.com/article/2013/03/06/markets-global-idUSL6N0BY30L20130306
