World shares hover near 6-year high, euro gains

BY RICHARD LEONG AND MARC JONES
NEW YORK/LONDON Mon Dec 30, 2013 10:58am EST


1 OF 4. People walk past an electronic information board at the London Stock Exchange in the City of London October 11, 2013.
CREDIT: REUTERS/STEFAN WERMUTH

(Reuters) - World stocks hovered near a six-year high on Monday, putting the finishing touches to a bumper year, as the euro strengthened against the dollar and yen on comments from European Central Bank chief Mario Draghi.

U.S. benchmark yields slipped below the 3 percent threshold after they hit a two-year high last week on expectations of improving domestic growth as the Federal Reserve begins to pare its massive bond-purchase stimulus in January.

Optimism about the global economy further reduced the appeal of gold, which will record its biggest annual loss in 32 years.

Oil prices fell below $112 a barrel in London on signs crude exports from Libya might return to normal due to a possible end to a four-month blockage of a key port.

MSCI's all-country world equity index .MIWD00000PUS edged up 0.06 percent to 407.06, its highest level since late 2007. It was poised to gain 9.8 percent for the year, following a 13.4 percent rise in 2012.

Wall Street opened little changed on the heels of the biggest two-year gains for the Standard & Poor's 500 index in five months. The S&P was on track to book a 29.1 percent annual rise this year, its biggest since 1997. .N

"This market was one that performed better than all expectations and did that despite an improving yet sluggish economy," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

The Dow Jones industrial average .DJI was up 5.17 points, or 0.03 percent, at 16,483.58. The Standard & Poor's 500 Index .SPX was down 1.97 points, or 0.11 percent, at 1,839.43. The Nasdaq Composite Index .IXIC was down 9.66 points, or 0.23 percent, at 4,146.93.

After years in which financial markets lurched from the debt crisis in Europe to U.S. political deadlock, investors are generally becoming more upbeat on the global economic outlook.

In Europe, most European stock indexes fell but stayed on track to post their biggest annual gains in four years on support from the ECB and a strengthening economic recovery.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.3 percent at 1,310.14 but still set to post a gain of 16 percent for the year, its best annual performance since 2009.

Japanese shares .N225 ended 2013 with a flourish, up 0.7 percent - 56.7 percent for the year. Tokyo's Nikkei index has posted its strongest run-up since 1972 as aggressive government and central bank policies have driven the plunge of its currency in an effort to help exporters and stimulate domestic demand.

"This year has seen the renaissance of equities as the financial crisis ended. Next year should see the end of the economic crisis, and it should bring more opportunities for stock investors," said David Thebault, head of quantitative sales trading at Global Equities in Paris. .EU

Thin year-end conditions made for more lively moves in the currency market.

The euro last traded up 0.4 percent to $1.3804, short of $1.3892 set on Friday - which was the highest since October 2011. The single European currency also strengthened against the yen, rising 0.4 percent to 145.08 yen after hitting a five-year peak of 145.675 yen on Friday. <FRX/>

Comments by European Central Bank President Mario Draghi in Germany's Der Spiegel that he saw no urgent need to cut interest rates again and no signs of deflation supported the euro.

"At the moment we see no need for immediate action. We don't have Japanese conditions," he said. (here)

U.S. YIELDS FALL
Yields on the U.S. benchmark 10-year Treasury note declined to 2.98 percent early Monday after climbing to their highest in more than two years at 3.02 percent last week.

Federal borrowing costs had risen in reaction to the U.S. central bank's decision earlier this month to dial back its bond purchases next week by $10 billion a month to $75 billion.

Fed Reserve officials have expressed cautious optimism of improving domestic growth in 2014, helped by other major economies showing signs of improvement.

Global growth hopes lifted copper and aluminum to four- and two-month highs. Aluminum clung to a 0.8 percent rise but copper give up its earlier gains, last down 0.03 percent.

Safe-haven gold fell 0.6 percent to $1,205.80 an ounce as the precious metal trudged toward its biggest annual loss in over three decades. <GOL/>

In the oil market, Brent crude fell 88 cents or 0.8 percent at $111.30 a barrel, while U.S. oil futures shed 56 cents or 0.6 percent at $99.76. <O/R>

http://www.reuters.com/article/2013/...96S00E20131230