GLOBAL MARKETS-Shares recover, euro steady as euro zone data stabilises

Tue Jan 8, 2013 8:02am EST

* European shares recover to stand up 0.3 pct
    * Euro zone data points to stabilisation of weak economy
    * Dollar falls vs yen after sharp and rapid rise
    * Cautious open expect on Wall Street

    By Marc Jones
    LONDON, Jan 8 (Reuters) - European shares edged up on
Tuesday as data signalled the euro zone economy may be
stabilising at a weak level, and the euro held steady while
commodity markets were largely subdued as investors sat on
recent gains.
    The data was mixed. Euro zone business confidence improved
again in December, but unemployment reached a new record and
households held back from spending in the run-up to Christmas,
suggesting a recovery from recession will be slow. German
industrial orders also fell more than forecast due to a sharp
drop in demand from abroad.  
    European shares had already recovered from early
falls by the time the euro zone data was published and they were
up 0.3 percent by 1200 GMT while the euro held steady at 
just over $1.3120.
    Deutsche Bank economist Gilles Moec said the data were in
line with the euro zone purchasing managers' indexes.
    "What we knew from the PMIs was that we have some
stabilisation albeit in a state of recession in Q4, and that is
what these data are also pointing to," he said. "Things are bad,
it is still consistent with recession, but at least they have
stopped deteriorating."
    London's FTSE 100 and Paris's CAC-40 had
both shrugged off their morning weakness by midday although
Frankfurt's DAX continued to lag after a slump in
exports pointed to a poor end to 2012 for the German economy.
  
    Wall Street was expected to open in a more cautious mood
with futures for the S&P 500, the Dow Jones and
the Nasdaq 100 between flat and down 0.3 percent.
    In the currency market, the dollar paused a sharp rally
against the yen which has seen it climb almost 12 percent
in less than two months. The rise has come as expectations grow
that Japan's new government will push the central bank to ease
policy aggressively in the next few months.
    The dollar was last down 0.4 percent at 87.40 yen, some way
off the 2-1/2 year high of 88.48 hit last Friday.
    "We will perhaps see a marginal retracement (in dollar/yen)
over the next couple days and I'd be slightly more bearish
dollar over the next few days ... on profit taking," said Geoff
Kendrick, FX strategist at Nomura.
  
    
    STEADY MARKETS
    Bond markets smoothly digested the first debt sales of the
year by the Netherlands and Austria as well as Spain's
announcement that it plans to borrow 121.3 billion euros this
year, 7.6 percent more than 2012. 
    Madrid is expected by many people to turn to official
lenders for a bailout in 2013, although a European Central Bank
promise to keep the euro together has significantly reduced the
pressure.
    German government bond prices also edged higher as investors
dipped a toe back into the market for low-yielding but secure
assets as a steep selloff last week made valuations more
attractive. 
    The German bund future was up 15 ticks at 143.21,
climbing for a second day after a small rise on Monday and
moving in line with U.S. Treasuries. The rebound follows a three
point sell off last week when an easing of U.S. fiscal concerns
saw investors pile into riskier assets.    
    In commodity and metal markets, oil steadied above
$111 a barrel, copper was flat and gold edged back above
$1,655 an ounce before data on Thursday from China and the ECB's
monthly meeting.
    "The market is underpinned by expectations that a cyclical
rebounding out of China will be positive for industrial metals,
and there is more positive sentiment now in the market," said
Robin Bhar, analyst at Societe Generale.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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