GLOBAL MARKETS-China, German data push shares to 5-year highs

Wed May 8, 2013 9:12am EDT

* MSCI world index, FTSEurofirst 300 hit five-year peaks
    * China reports stronger-than-forecast April trade data
    * March German industrial output also beats estimates
    * Euro rises, Australian dollar rebounds
    * Copper climbs

    By Marc Jones
    LONDON, May 8 (Reuters) - Strong Chinese trade data and
signs that Germany may escape a severe spring slowdown pushed
world shares to five-year highs on Wednesday and boosted
growth-sensitive currencies and metals.
     Wall Street, which has climbed over 13 percent this year,
was also eyeing another record day for the S&P 500 and Dow Jones
industrial average, with futures  pointing to minor
gains for both. 
    Last Friday's upbeat U.S. jobs data and robust German
factory orders earlier this week have driven up global stock
markets, and the positive mood was cemented on Wednesday as
China followed suit.
    Exports and imports in the world's number two economy were 
up 14.7 and 16.8 percent respectively in April. However,
economists believe that manoeuvring by exporters and speculative
capital inflows are masking weakness in real global
demand. 
    The equity market rally showed no sign of letting up as huge
injections of liquidity from leading central banks to boost
their economies outweighed the doubts about the Chinese data.
    MSCI's world index, which tracks stocks in
45 countries, rose 0.4 percent to a five-year high as top
European shares followed their Asian counterparts.
    Europe's bourses and the euro received an extra boost after
German industrial production beat even the most optimistic of
forecasts to jump by 1.2 percent in March..
    "The improving orders situation in the industrial sector and
a recovery in construction should give further impetus to the
manufacturing industry in the coming months," Germany's Economy
Ministry said in a statement.
    The FTSEurofirst 300, which reached its own
five-year peak on Tuesday, was up 0.4 ahead of the Wall Street
restart as London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX held gains at 0.2-0.6 percent.
    "The good news is that the German data are better than had
been anticipated... and if you add that to the U.S. non-farms
payrolls we saw on Friday, the spring slowdown doesn't seem to
be as severe as feared," said Rabobank economist Philip Marey.
    "If you look at stock markets, in a sense we are in an
optimal balance. The data aren't strong enough so that the
central banks would stop supporting the markets and at the same
time the data aren't so bad that we are falling off a cliff."   
   
    
    WATCHING GERMANY    
    In the currency market, the German data pushed the euro
 up 0.5 percent to $1.3135 as the safe-haven dollar 
softened and markets began to question whether the ECB would
need to cut rates again.  
    Elsewhere the Australian dollar was hovering at a
day high of $1.0195 after the data from China, its biggest
export market. And across the Tasman sea, the Kiwi dollar
 fell as its central bank revealed it had intervened in
the market to try and cool the currency. 
    Copper - one of the commodities tied most closely to global
growth prospects - jumped more than 2.5 percent to a three-week
high of $7,447 a tonne, but Brent crude gave
back early gains to drop back below $104 a barrel.
    Commodities remain the stand-out laggard of the
stimulus-induced rally that has gripped markets since last May.
Oil is 7 percent down versus this time last year, while last
month copper hit its lowest in a year-and-a-half following weak
growth data.
    "Even with the news from China and Germany, the background
is still pretty weak on the oil side as the market is well
supplied," said Simon Wardell, analyst at Global Insight.
    With little obvious read-across from the Asian data,
European bond markets had been waiting for the German figures
and the results of a five-year German debt auction.
    The reassuring numbers and a smooth 4 billion euro sale for
Berlin saw benchmark safe-haven Bunds pare gains and
left investors trying to gauge the European Central Bank's next
interest rate move.  
    With the global economic recovery remaining patchy, there
have been clear signals from almost all the world's big central
banks that they remain firmly in support mode.
    While the Bank of Japan pursues an unprecedented stimulus
drive, European Central Bank head Mario Draghi reiterated
earlier this week that the bank would cut rates again if needed,
and Australia's rates hit a record low on Tuesday.
    "It's as if central banks were supporting their own
government's bond markets. Wait a minute, they are!" said
Rabobank strategist Adrian Foster.
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