GLOBAL MARKETS-Shares dip, but set for fourth week of gains

Fri Jul 19, 2013 6:01am EDT

* European shares dip but head for fourth week of gains
    * Asian stocks mixed after Wall Street's record high
    * Japan upper house election on Sunday in focus, yen claws
up
    * Bonds, commodities see quiet end to week

    By Marc Jones
    LONDON, July 19 (Reuters) - World stocks fell back on
Friday, but were set for a fourth week of back-to-back gains
following generally strong U.S. earnings and assurances from the
Federal Reserve about its plans for stimulus withdrawal.
    Major currency and commodity markets were subdued, with the
dollar giving back some of Thursday's gains, the euro
 steady and the yen pushing up on position-squaring
ahead of elections in Japan on Sunday. 
    Europe's FTSEurofirst 300 share index was down 0.4
percent by mid-morning after some weaker earnings overnight, but
it was firmly on course for its first four-week run of
uninterrupted gains since May, as was MSCI's 45-country
all-world index, which fell 0.1 percent.  
    Analysts say the rises in world stocks have been fuelled
this week by solid corporate earnings, especially in the United
States, and by reassurance from Fed Chairman Ben Bernanke over
the U.S. central bank's easy monetary policy. 
    "A lot of cash has gone into the market over the last few
months but people are now sitting back a bit," said Terry
Torrison, managing director at Monaco-based McLaren Securities. 
    Wall Street finished at another record high on Thursday but
was expected to open 0.2 lower  when it resumes
later, after disappointing results from Google and Microsoft
after the bell.  
    Asian trading was choppy overnight with profit-taking on
Japan's Nikkei matched by some cautious yen 
buying ahead of Upper House elections on Sunday. 
    The elections are expected to strengthen the hand of Prime
Minister Shinzo Abe and his radical stimulus strategy, with his
ruling Liberal Democratic Party (LDP) and its New Komeito Party
(NKP) coalition partner expected to win resoundingly.
    Some economists worry that if the LDP wins outright Abe
could sideline economic reforms and prioritise more nationalist
policies, though that was not the consensus. 
    "If the LDP-NKP coalition wins control of the upper house
and receives a decent mandate for reform, we would remain
comfortable with our USD/JPY forecast profile of 103 in 3 months
and 105 in 12 months," Barclays Capital analysts wrote in a
report. 
  
    
    G20
    In the debt market, German Bund futures were in a holding
pattern having hit their highest level in six weeks in the
previous session. 
    This week's reassurances from Bernanke have helped beat back
lingering concerns about near-term rises in bond yields and
reduced volatility in both core and emerging financial markets.
 
    Euro zone periphery bonds were also little changed following
gains on Thursday after the ECB loosened its lending rules, and
after Portugal's centre-right government easily defeated a
no-confidence vote. 
    Ten-year Spanish government bond yields were
1.3 basis points higher at 4.65 percent while the Italian
equivalent was down 1.3 bps at 4.41 percent.
Portuguese 10-year yields were 3.3 bps lower at
7.07 percent.
    Market participants were also awaiting a meeting of Group of
20 finance ministers for signs of an orchestrated approach to
the end of U.S. money-printing, which could help defuse
volatility in global markets.
    The G20, which meets in Moscow on Friday and Saturday,
includes many of the emerging economies that have been at the
sharp end of the dollar's surge since Bernanke first signalled
in May that the Fed would roll back its bond-buying programme.
 
    After a steady week for commodities, gold was flat at
$1,286 an ounce while Brent oil held above $108 a
barrel, hovering near a three-month high on hopes of a gradual
recovery in U.S. demand.
    New claims for jobless benefits fell in the world's biggest
economy and factory data improved on Thursday, close on the
heels of a steep drawdown in U.S. crude stocks for a third
straight week.
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