GLOBAL MARKETS-World shares hit highest since June 2008

Fri Mar 8, 2013 7:56am EST

* European shares rise further, MSCI world index hits 4-3/4
yr high
    * U.S. jobs data eyed, China exports beat forecasts
    * Dollar touches 3-1/2-year peak against yen

    By Marc Jones
    LONDON, March 8 (Reuters) - World shares hit their highest
level since June 2008 and the dollar set a fresh 3-1/2-year high
against the yen on Friday, ahead of U.S. jobs data expected to
point to a continuing pick up in the world's biggest economy.
    With U.S. payrolls figures due at 1330 GMT expected to show
firms added 160,000 jobs last month versus 157,000 in January,
Wall Street was expected to open higher again following this
week's record highs for the Dow Jones Industrial Average. 
    China also gave markets a boost as official data showed
February exports grew 21.8 percent versus a year ago, more than
double the expected rise. 
    European shares, which have rebounded strongly
after last week's Italian election and U.S. spending
cuts-related wobble, were up 0.5 percent ahead of the jobs data
and on track for their best week since the start of the year.
    Japan's Nikkei had hit a 4-1/2 year high in Asian trading
and 0.3, 0.9 and 0.6 rises by London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX helped MSCI's world
share index to its highest level since late June
2008.
    "There appears to be a strong risk-on mood in the market at
the moment," said Ken Wattret, co head of European market
economics at BNP Paribas. 
    "The negativity from the Italian elections was shrugged off
pretty quickly, the Fed has made it clear that its policy will
remain accommodative. If we get a get a good set of payrolls
numbers, that will further fuel that sentiment."
    MSCI's world index tracks 9,000 stocks in 45 countries. Its
rise illustrates how investors have returned to stocks and other
"risk" assets over the last eight months as slowly improving
world growth and the European Central Bank's pledge to prevent a
break-up of the euro, have combined to bolster sentiment.
    Friday's U.S. payrolls report is key to gauging the Federal
Reserve's policy course going forward. The bank has promised 
that as long as inflation doesn't pose a threat, it will keep
interest rates near-zero until unemployment falls to 6.5
percent.DOLLAR STRENGTH
    In the currency market, the sudden spike in tensions on the
Korean peninsula added to the more dominant U.S. growth-led
demand for the dollar.
    Having said earlier in the week it was scrapping its
armistice with South Korea, North Korea threatened the United
States on Thursday with a preemptive nuclear strike after
accusing it of warmongering.   
    The dollar was up 0.2 percent against a basket of
major currencies ahead of the jobs data but most of the focus
was on its continued rise against the yen after it hit a
3-1/2 year high of 95.75 yen.
    If the Bank of Japan's new leaders expands its stimulus
programme next month as expected, the dollar could trade in the
95-98 yen area or even open the way for a test of 100 yen, said
Ronald Ip, Director of Wealth Solutions Group for HSBC Global
Markets.        
    The euro, meanwhile, shrugged off some early weakness
to climb back above $1.31 and hold on to the bulk of previous
day's gains after the ECB wrong-footed investors who had been
expecting more of a signal on rate cuts from Mario Draghi.
 
    Fresh euro zone data continued to support the calls for a
cut that some of the ECB's members had pushed for on Thursday.
    Although it was slightly better than had been expected,
Spain's industrial output fell 5 percent year-on-year in
January, the seventeenth month of declines. 
    France's central bank also maintained its view that its
economy will only just dodge recession this quarter, while even
Germany saw its muscular industrial sector stall in January.
  
    
    GRADUAL GAINS
    With demand for low-risk assets cool ahead of the U.S. data,
German Bund futures edged lower to 142.70 having fallen the
previous day after the ECB's less dovish than expected tone.
    Italian bonds continued to slowly claw back
ground they lost after last week's inconclusive election result
re-ignited concerns about its fiscal rehabilitation programme.
    The stronger dollar and the bright Chinese data were also
the focus of commodity markets. Most of the world's raw
materials are bought and sold in dollars so its movements can
have a strong influence on prices.
    Oil prices steadied above $111 a barrel, leaving
them almost bang in line with where they started the year after
an up and down few weeks. Copper and gold were
both little changed but on course for their first weekly gains
since mid-February.
    After a week which has seen five the world's top 10 central
banks decide to leave policy unchanged in the face of a very
modest global growth outlook, expectations for gradual gains in
riskier assets are unchanged.
    "We continue to look for ways to gradually build risk rather
than reduce, and what we're seeing from the central banks leaves
us unchanged in that view," Johan Jooste, chief market
strategist at Merrill Lynch Wealth Management said.
    "It's not like we're sittings on our hands. What we're doing
is, at the margin, adding risk rather than piling straight into
it at these levels."