GLOBAL MARKETS-Shares edge up, but set for worst week since June
* Shares rebound but on track for worst week since June * Gold, oil, copper off lows but remain vulnerable * Yen falls as G20 response to Japan stimulus mild By Marc Jones LONDON, April 19 (Reuters) - World stocks rebounded on Friday but remained on course for their worst week in almost a year after a sell-off triggered by global economic growth concerns. Surprisingly weak Chinese and U.S. economic data, on top of the International Monetary Fund's decision to trim its global growth forecast, has hit commodities from gold to oil this week and brought the recent rally in equity markets to a halt. With investors lured back by the recent drop in prices and sentiment lifted by robust earnings from manufacturing giant and global conglomerate General Electric, futures prices pointed to Wall Street breaking its two-day run of falls. Ahead of the U.S. restart, gains by top European shares had extended to 0.8 percent as London's FTSE, Frankfurt's DAX and the Paris CAC-40 bounced 0.6, 0.5 and 1.3 percent respectively. MSCI's world share index, which tracks around 9000 stocks in 45 countries, was up 0.3 percent, but a run of heavy losses earlier in the week left it down 2.6 percent since Monday and facing its heaviest weekly fall since June. "The weaker Chinese data has combined with the numbers from the U.S. and it has been translated by people as that the global economy is actually at a much weaker stage than has been price in," said Daiwa Securities economist Tobias Blattner. "I think the correction could continue if we get a snap election in Italy, but if you ignore the political risk I think we are going to go into a phase of muddling through where shares stay roughly where they are, but with a lot of volatility." The chance of that sudden Italian election appeared to rise earlier in the day after Italy's centre-left Democratic Party (PD) backed former Prime Minister Romano Prodi to become the country's new president. Differences between the main parties mean his nomination is likely to snuff out the slim chances of an alliance government being formed in Rome and lead to re-run of February's inconclusive election, possibly within weeks. Bond investors were unfazed by the uncertainty, however. Italian government bonds rose slightly, while German bonds, which have edged higher during this week's sell off in riskier assets, dipped back 22 ticks to 146.05. YEN FALLS In the currency market, the yen fell back to 99.20 yen to the dollar after Japan said the Group of 20, which is meeting in Washington, had accepted that the Bank of Japan's sweeping monetary expansion is aimed at beating deflation rather than competitively weakening the yen. Finance leaders at the meeting are set to debate specific targets for reigning in debt levels as well as the potential dangers from the latest round of aggressive easing of monetary policy from the world's biggest central banks. In an interview with Reuters as the gathering got underway, EU Economic and Monetary Affairs Commissioner Olli Rehn said the euro zone would slow its budgetary belt-tightening to help reinvigorate economic growth. A number of top countries, including the United States, have called for this from the bloc and the message helped support the euro as it climbed 0.3 percent to just below $1.31. The currency has largely held its ground this week despite comments from the Bundesbank which have bolstered expectations of a cut in European Central Bank interest rates next month. Finland's central bank governor Erkki Liikanen added to the debate among economists on whether the ECB should go even further and, like other top advanced economy central banks, heavily buy bonds and other assets to help boost growth. Asked by a Finnish economic magazine if the bank could use unconventional means to boost the euro zone economy and step in to buy corporate bonds, Liikanen said: "One has always to be ready to explore new options. Our task is to work through money markets." COMMODITIES MIXED The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed particularly heavily on commodity markets this week. Investors in U.S.-based funds pulled a record $2.7 billion out of commodities and precious metals funds over the last week, Thomson Reuters Lipper data show. Oil Ÿ fell below $100 a barrel for the first time since July earlier this week. It was 0.8 percent higher at 99.85 as U.S. trading started but like a broad range of commodities was set for its third drop in as many weeks. Copper, a gauge for manufacturing and China-related growth, was down 1.5 percent at $6,977 a tonne having broken below $7,000 for the first time since late 2011 on Thursday. But it has been gold that has grabbed many of the headlines. It suffered its biggest daily drop in dollar terms on record on Monday as Cyprus's forced plans to sell gold and the recent shift in funds' behaviour towards the precious metal spooked investors, but it has since clawed back some of that ground. As buyers continued to filter back into the market, spot gold was holding above $1,400 an ounce but the brutal sell-off at the start of the week left it heading for a fourth week of losses. "This (stabilisation) gives us some confidence that as panic selling passes, prices can rebound by $100-150 an ounce and trade in the $1,400-$1,550 range over the next 3-6 months," said Mark Pervan, global head of commodity strategy at ANZ, referring to a pickup in physical gold sales in India and China.
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