GLOBAL MARKETS-Dollar off lows, shares up on promising earnings, data

Tue Jul 30, 2013 7:49am EDT

* Dollar index gains, moves away from five-week low
    * Wall Street expect to open 0.2 percent higher
    * European shares edge higher as data, earnings lift
    * Aussie dollar skids after RBA chief hints at rate cut
    * Chinese central bank injects cash for 1st time since Feb

    By Marc Jones
    LONDON, July 30 (Reuters) - The dollar eased off a five-week
low and shares inched up on Tuesday as a heavy session of
European data and earnings supported growth prospects heading
into this week's three big central bank meetings.
    A pick-up in euro zone consumer and business confidence gave
stock markets a boost as they await policy clues from the U.S.
Federal Reserve, ECB and Bank of England this week.
    It was also one of the busiest days of the European earnings
season so far with over 40 of the region's major companies
announcing results. 
    Strong showings from French utility EDF and German
chip-maker Infineon helped lift European shares though
disappointments from oil major BP and UK bank Barclays trimmed
the gains to leave MSCI's world index up 0.1
percent by 1100 GMT.
    Economic morale in the euro zone reached a 15-month high in
July, surveys showed, underpinning Europe's chances of a gradual
exit from nearly three years of economic downturn, while Spanish
data showed the economy closer to emerging from its slump.
     
    However, many investors were happier to stay on the
sidelines, awaiting the outcome of the Fed's two-day meeting on
Wednesday, and those of the ECB and Bank of England on Thursday.
    The dollar continued to edge away from Monday's
five-week low as investors viewed its sharp drop over the last
two weeks as a chance to get back in ahead of the Fed meeting
and this week's growth and jobs data. 
    "Personally I think the Fed is not going to want to rock the
boat, but what could change market expectations is the U.S. data
that is coming out," said Alvin Tan, FX strategist at Societe
Generale.
    "It is not only the Fed that is coming up tomorrow, we also
have U.S. second quarter GDP, ISM data and on Friday we have
non-farm payrolls... if these come in strong the market is going
to start pricing in a faster tapering cycle again." 
  
    
    AUSSIE DOLLAR DIVE
    Currency traders were also watching the Australian dollar
 as hints from the central bank's governor of another
rate cut at next week's RBA meeting sent it to a two-week low of
$0.9085. 
    "The recent decline in the exchange rate seems to make sense
from a macroeconomic perspective," Glenn Stevens told a charity
lunch. "It would not be a major surprise if a further decline
occurred over time."
    Wall Street was expected to open around 0.2 percent higher
when trading resumes later, with two days of minor declines
expected to attract some buying. 
    Earlier in Asia, Japan's Nikkei bounced 1.5 percent
as the yen eased, though stocks elsewhere in the region
finished flat as China's central bank's first injection of funds
into money markets since February was balanced by some mixed
data. 
    Commodities stayed under pressure before the Fed meeting and
on concerns about China's outlook. Analysts polled by Reuters
before data on Thursday forecast its manufacturing sector may
have shrunk in July for the first time in 10 months.
 
    Copper hit a new three-week low as it fell about 1.4
percent to $6,785 a tonne, gold inched down to $1,322.5
an ounce and .U.S. crude lost 0.6 percent to drop below
$104 a barrel.        
    Europe's debt markets were quiet again with Bunds 
little changed before this week's ECB meeting where the central
bank is expected to give some details on its plans to provide
"forward guidence" on rates for the first time.
    Italian debt made minor gains as its treasury comfortably
sold 6.75 billion euros of bonds as planned.
    Silvio Berlusconi faces a Supreme Court ruling this week
that could see him banned from public office and potentially
hurt Italy's shaky coalition government. 
 
    But "Italy is doing fairly well given the political
turmoil," DZ Bank strategist Christian Lenk said. "The market is
still ignoring the issue because it's (in its) early stages."