GLOBAL MARKETS-Stocks, euro up on China data; Fed uncertainty lingers

Mon Dec 9, 2013 2:50pm EST

* Robust China trade data a promising sign for global growth

* Three Fed officials speak on outlook for stimulus reduction

* Japanese shares jump as yen hits five-year trough on euro

* Bonds steady, euro at six-week high vs dollar

By Wanfeng Zhou

NEW YORK, Dec 9 (Reuters) - Stock markets worldwide rose on Monday and the euro climbed to a six-week high against the dollar after encouraging trade and inflation data from China, but uncertainty about the outlook for U.S. monetary policy limited moves.

Solid data from the United States and China has boosted confidence that the global economy is recovering well enough to withstand a scale-back in stimulus by the Federal Reserve, with investors focused on clues about the timing of action.

The Fed will start reducing its massive bond-buying program no later than March, according to a Reuters poll on Friday following a strong jobs report, with a handful of Wall Street firms expecting it to take action as early as next week. The U.S. central bank next meets on Dec. 17-18.

St. Louis Fed President James Bullard, who is a voting member on the Fed's policymaking committee this year, said Monday the Fed could slightly reduce its monthly bond purchases this month in reaction to signs of an improved labor market.

Dallas Federal Reserve Bank President Richard Fisher said the U.S. central bank should start to trim its massive bond-buying program next week. Richmond Fed President Jeffrey Lacker said further monetary stimulus is unlikely to do much to help the U.S. economy and the risks of pressing ahead with the policy outweigh the benefits.

"There is no question: at some point, there is tapering. Whether that is December or March or June, it's coming. All the Fed-speak helps the market get prepared for that," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

The MSCI world equity index, which tracks shares in 45 countries, rose nearly 0.5 percent.

China's exports handily beat forecasts in November, adding to evidence of a stabilization in the world's second-largest economy, while an unexpected drop in consumer inflation eased fears of any imminent policy tightening.

"The strong labor data out of the U.S. and the robust trade balance numbers from China suggest that global growth may be better than the consensus view," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

The Dow Jones industrial average gained 13.81 points, or 0.09 percent, to 16,034.01. The Standard & Poor's 500 Index rose 3.42 points, or 0.19 percent, to 1,808.51. The Nasdaq Composite Index added 5.07 points, or 0.12 percent, to 4,067.59.

European shares ended up 0.2 percent, while Tokyo's Nikkei climbed 2.3 percent.

The benchmark 10-year U.S. Treasury note was up 8/32, the yield at 2.8517 percent.

YEN SLIPS

The euro rose as high as $1.3745, according to Reuters data, as short-term interest rates in the euro zone money market edged up after the European Central Bank last week dented speculation of any imminent easing.

Against the yen, the euro climbed to 141.93 yen, reaching highs not seen since October 2008. It was last trading at 141.78, up 0.6 percent on the day.

The dollar gained 0.3 percent to 103.20 yen, not far from the six-month peak of 103.37 set last Tuesday. The yen continued to underperform on the Bank of Japan's ultra-loose monetary policy and the pick-up in risk appetite.

Strong Chinese data helped lift copper prices, while spot gold rose to $1,236 an ounce from $1,228.24.

Brent futures fell $2.19 a barrel to $109.42 as well-supplied markets and limited demand from European refiners pushed prices lower. U.S. crude was off 18 cents at $97.47.

Emerging market attention remained on Thailand after Prime Minister Yingluck Shinawatra called snap elections in an attempt to defuse the country's tensions. The Thai baht rose almost 1 percent versus the dollar only to slide along with Bangkok shares as anti-government protest leaders vowed to fight on.

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Comments (1)
Vulndare wrote:
Fat chance. They’re never tapering.

Dec 09, 2013 3:39pm EST  --  Report as abuse
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