GLOBAL MARKETS-World stock index hits 6-year high, euro gains

Mon Dec 30, 2013 4:37pm EST

* S&P index set for biggest annual rise in 16 years
    * Japanese stocks on track for best year since 1972
    * Euro near 5-year high vs yen, two-year high vs dollar
    * U.S. benchmark yields slip below 3 percent


    By Richard Leong
    NEW YORK, Dec 30 (Reuters) - World stock markets rose to a
six-year high on Monday on optimism about the global economy
heading into 2014, while the euro strengthened against the
dollar and yen on comments by European Central Bank chief Mario
Draghi.
    U.S. benchmark yields slipped below the 3 percent threshold
after they hit a two-year high last week on expectations of
improving domestic growth as the Federal Reserve begins to pare
its massive bond-purchase stimulus in January.
    Views on economic improvement further reduced the appeal of
gold, which will record its biggest annual loss in 32 years.
    Oil prices fell to near $111 a barrel in London on signs
crude exports from Libya might return to normal due to a
possible end to a four-month blockage of a key port.
 
    MSCI's all-country world equity index edged
up 0.1 percent to 407.30 points, its highest since late 2007. It
was poised to gain almost 10 percent for the year, following a
13.4 percent rise in 2012. 
    Wall Street stocks were little changed, with the Standard &
Poor's 500 index on track to book a 29.1 percent annual rise
this year, its biggest since 1997. 
    "We certainly have had quite an impressive year, and
obviously a lot of that was helped by the central bank stimulus.
Given what we've seen so far, the path of least resistance has
been to go higher," said Ryan Larson, head of equity trading at
RBC Global Asset Management in Chicago.    
    The Dow Jones industrial average closed up 25.88
points, or 0.16 percent, at 16,504.29. The Standard & Poor's 500
Index ended down 0.33 points, or 0.02 percent, at
1,841.07. The Nasdaq Composite Index finished down 2.40
points, or 0.06 percent, at 4,154.20.
    After years in which financial markets lurched from the debt
crisis in Europe to U.S. political deadlock, investors are
generally becoming more upbeat on the global economic outlook.  
 
    Most European stock indexes fell but stayed on track to post
their biggest annual gains in four years on support from the ECB
and a strengthening economic recovery.
    The FTSEurofirst 300 index of top European shares
provisionally closed down 0.2 percent at 1,311.76 but was still
set to post a gain of 16 percent for the year, its best annual
performance since 2009.     
    Japan shares ended 2013 with a flourish, up 0.7
percent - 56.7 percent for the year. Tokyo's Nikkei index has
posted its strongest run-up since 1972 as aggressive government
and central bank policies have driven the plunge of its currency
in an effort to help exporters and stimulate domestic demand.
    "This year has seen the renaissance of equities as the
financial crisis ended. Next year should see the end of the
economic crisis, and it should bring more opportunities for
stock investors," said David Thebault, head of quantitative
sales trading at Global Equities in Paris.    
    Thin year-end conditions made for more lively moves in the
currency market.
    The euro last traded up 0.4 percent to $1.3796, short
of $1.3892 set on Friday - which was the highest since October
2011. The single currency also strengthened against the yen
, rising 0.4 percent to 144.99 yen after hitting a
five-year peak of 145.675 yen on Friday. 
    Comments by European Central Bank President Mario Draghi in
Germany's Der Spiegel that he saw no urgent need to cut interest
rates again and no signs of deflation supported the euro.
 
    "At the moment we see no need for immediate action. We don't
have Japanese conditions," he said.
    
 
    
    U.S. YIELDS FALL
    Yields on the U.S. benchmark 10-year Treasury note slipped  
to 2.97 percent as bargain-hunting emerged two days before the
end of 2013. The 10-year yield climbed to its highest in more
than two years at 3.02 percent last week.
    Federal borrowing costs had risen in reaction to the U.S.
central bank's decision earlier this month to dial back its bond
purchases next week by $10 billion a month, to $75 billion.
    Fed Reserve officials have expressed cautious optimism on 
improving domestic growth in 2014, helped by other major
economies showing signs of improvement.
    The U.S. housing recovery has supported the overall economy,
with pending home sales edging up 0.2 percent in November.   
[ID: nL2N0K90R1]  
    Global growth hopes lifted copper and aluminum
 to four- and two-month highs. Aluminum clung to a 0.7
percent rise to close at $1,822 a tonne but copper nearly erased
its early gains, closing up 0.03 percent at $7,380 a tonne.
 
    Safe-haven gold fell 1.3 percent to $1,196.91 an
ounce in late trading as the precious metal headed toward its
biggest annual loss in over three decades. 
    In the oil market, Brent crude settled 97 cents or
0.86 percent lower at $111.21 a barrel, while U.S. oil futures
 settled down $1.03 or 1 percent at $99.29.
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