GLOBAL MARKETS-China data lifts stocks; BOJ plan weighs on yen

Wed Apr 10, 2013 10:19am EDT

* Stock markets around world rise on Chinese data

* Japan's Nikkei climbs to 5-year high on BOJ stimulus plan

* Yen near multi-year lows vs major currencies, euro climbs

NEW YORK, April 10 (Reuters) - Chinese import data bolstered stock markets around the world higher on Wednesday while Japan's economic stimulus package continued to weigh on the yen, sending it to a three-year low against the euro and a four-year low against the dollar.

U.S. stocks also rose, with the S&P 500 index touching a record intraday high, though sentiment was slightly eroded by the Federal Reserve's unexpected decision to release the minutes of its latest policy-setting meeting much earlier than scheduled due to an earlier inadvertent partial release.

But it was economic data from China that set the mostly positive tone early in the day as imports of key commodities rebounded in March, signaling domestic demand was picking up and would help drive the world's second-largest economy.

The data boosted mining and basic resources stocks, and supported industrial commodities including oil, aluminium and nickel. However, some analysts cautioned slow Chinese export growth left a more mixed picture on the global economic outlook.

"This is two pieces of Chinese economic data in a row that have proven positive," said Art Hogan, managing director of Lazard Capital Markets in New York. Data on Tuesday had showed annual consumer inflation in China cooled last month.

The Dow Jones industrial average was up 70.76 points, or 0.48 percent, at 14,744.22. The Standard & Poor's 500 Index was up 9.54 points, or 0.61 percent, at 1,578.15. The Nasdaq Composite Index was up 29.48 points, or 0.91 percent, at 3,267.34.

The unexpected release of the Fed policy minutes briefly rattled investors.

A few U.S. Federal Reserve policymakers expected to taper the pace of asset purchases by mid-year and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end, according to the minutes of the Fed's March meeting..

The MSCI all-world share index,, which tracks stocks in 45 countries, rose 0.6 percent to its highest level since March 18.

Europe's FTSEurofirst 300 index was up 1.4 percent. EU]

European markets were also bolstered by growing hopes of an interest rate cut by the European Central Bank, and by signs of progress in dealing with the region's debt crisis, after international lenders said Ireland and Portugal should get more time to repay their bailout loans.

YEN WEAKENS

In the currency markets, the yen hit a more than three-year low against the euro and edged closer to 100 to the dollar as it extended a slide triggered by the Bank of Japan's massive monetary easing plan unveiled last Thursday.

But the same stimulus measure was a boon for Japanese stocks with Japan's key Nikkei index ended 0.7 percent higher at its highest close since August 2008.

The euro is being supported by speculation that Japanese investors, looking for higher returns as the BOJ action depresses domestic yields, may turn to euro zone bonds.

The dollar was bid as the Fed minutes were seen as maintaining the bias to end measures to stoke economic growth.

"Once again, the minutes have sounded a slightly more hawkish tone and that's really what's benefiting dollar/yen," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The euro was up 0.6 percent against the yen at 130.27 yen while the dollar was up 0.5 percent against the yen at 99.57 yen.

YIELD HUNT

The prospect of huge purchases of Japanese government bonds (JGBs) by the BOJ is seen as likely to send investors on a hunt for higher returns in assets denominated in currencies other than the rapidly-weakening yen.

Japanese government bond futures fell sharply on Wednesday, prompting the Tokyo Stock Exchange to halt trading briefly while the 10-year cash bond yield rose to a four-week high.

However, highly-rated euro zone bond yields, which have fallen on the hopes of Japanese demand, recovered from their recent lows. German 10-year yields climbed to 1.302 percent.

U.S. T-note yields were last at 1.786 percent after the release of the Federal Reserve's minutes of its March policy meeting.

The U.S. Treasury also plans to sell $21 billion in 10-year notes later and will sell $13 billion of 30-year bonds on Thursday.

GEOPOLITICAL TENSIONS

In the oil market, the signs of a strengthening Chinese economy added to support from geopolitical concerns, especially growing tension on the Korean peninsula and in the Middle East.

However signs of growing oil stockpiles were weighing on crude prices, leaving Brent futures down 0.3 percent at $105.87 per barrel. U.S. crude fell 0.2 percent to $94.01 a barrel.

Industrial metals, meanwhile, were adding to recent gains, helped by the improving trade data from top consumer China.

Aluminium rose 0.5 percent to $1,909 a tonne, zinc added 0.2 percent to $1,917 and lead gained 0.7 percent to $2,105.5.

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