GLOBAL MARKETS-China data boosts world shares, nerves hold over U.S. bond-buying taper

Mon Dec 9, 2013 9:14am EST

* European shares lose way after Asian rally, Wall Street seen flat

* Robust China trade data a promising sign for global growth

* Japanese shares jump as yen hits 5-year trough on euro

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

By Marc Jones

LONDON, Dec 9 (Reuters) - Weaker stocks in parts of Europe were not enough to halt world shares on Monday, as upbeat Chinese trade data added to cautious optimism that the world's economy and markets can cope with a gradual withdrawal of U.S. stimulus.

The moves helped both the dollar and the euro extend their gains on the yen, with the euro zone's currency hitting a new five-year high in what should be a boost to Japanese exports, profits and stocks.

While the solid U.S. jobs report may have brought forward the day when the Federal Reserve starts tapering its asset buying, the figures also suggested the economy was recovering well enough to withstand the move.

Two Fed members are due to speak later in the and markets will be highly sensitive to any comments that give a flavour of the U.S. central bank's assessment of the pick-up in the data.

Wall Street was expected to open slightly higher when trading resumes. Both the S&P 500 and Dow Jones Industrial Average jumped more than 1 percent on Friday though it was not enough to prevent a first weekly fall in nine.

In Asia, Tokyo's Nikkei had climbed 2.3 percent to leaving it nose-to-nose with last week's peak at 15,794 and although the upbeat sentiment faded in Europe, the region's FTSEurofirst 300 was back level after a morning wobble.

Paris's CAC 40 and London's FTSE were the only ones left in the red while Frankfurt's Dax outperformed as robust trade data offset a surprise fall in factory output.

"What is interesting is that markets are not pricing in any significant fall in stocks in January," said Ramin Nakisa, a global macro strategist at UBS in London, referring to the month UBS expects tapering to start.

The Fed has had considerable success in persuading investors that tapering is not tightening, and that interest rates will remain low for a long time to come.

Treasuries and European bonds remained resilient through the morning, with German bonds barely budged and 10-year U.S. yields steady at just below 2.85 percent having briefly spike to 2.93 percent on Friday.

YEN SLIPS

The improvement in risk appetite knocked safe havens like the yen, lifting the U.S. dollar as high as 103.23 yen on Monday and not far from last week's highs around 103.37 before it faded back to 102.90.

The euro had shot up to 141.55 yen, territory not visited since October 2008, while also making ground on the U.S. dollar. It briefly touched $1.3748 early on Monday before edging back to last trade at $1.3703.

The currency has been underpinned by rising short-term interest rates after the European Central Bank dampened hopes for an imminent easing move.

"To define portfolios of government bonds of euro zone member states and then to buy them would pose immense economic, legal and political challenges for the ECB," one of the central bank's top policymakers, Yves Mersch, said in Frankfurt.

Aiding sentiment in Asia was a set of robust trade numbers from regional powerhouse China over the weekend, encouraging the central bank to set the yuan at a fresh record high.

China's exports came in well above forecast in November, rising 12.7 percent from a year earlier, while imports rose 5.3 percent.

"The strength is likely supported by the recent improvement in global manufacturing activity, as evidenced by the strong(purchasing manager indexes) prints in major advanced economies," wrote analysts at Barclays.

THAILAND TENSIONS

That should be positive for many commodities with China importing a record amount of iron ore in November, while oil imports rebounded.

Prices for iron ore have been surprisingly firm around $139 a tonne recently, good news for Australia as it is the country's single biggest export earner.

That helped the Australian dollar nudge ahead to as much as $0.9145 on Monday before some profit taking kicked-in, well up from Friday's lows around $0.8989.

Emerging market attention remained on Thailand after Prime Minister Yingluck Shinawatra called snaps elections in an attempt to defuse the country's tensions.

The Thai baht rose almost 1 percent versus the dollar initially only to backslide along with Bangkok shares as anti-government protest leaders vowed to fight on.

U.S. crude oil futures were trading 7 cents firmer at $97.65 , having surged more than 5 percent last week. Brent edged around $111.61 a barrel.

Gold has not been so fortunate, stuck at $1,228.25 and only just above five-month lows. "Three digit gold is not our central case but it is possible," said UBS's Nakisa.

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