GLOBAL MARKETS-World shares hover near 6-year high, euro gains

Mon Dec 30, 2013 10:55am EST

* MSCI world share index holds at 6-year high
    * 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 and Marc Jones
    NEW YORK/LONDON, Dec 30 (Reuters) - World stocks hovered
near a six-year high on Monday, putting the finishing touches to
a bumper year, as the euro strengthened against the dollar and
yen on comments from 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.
    Optimism about the global economy further reduced the appeal
of gold, which will record its biggest annual loss in 32 years.
    Oil prices fell below $112 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 0.06 percent to 407.06, its highest level since late 2007. It
was poised to gain 9.8 percent for the year, following a 13.4
percent rise in 2012. 
    Wall Street opened little changed on the heels of the
biggest two-year gains for the Standard & Poor's 500 index in
five months. The S&P was on track to book a 29.1 percent annual
rise this year, its biggest since 1997. 
    "This market was one that performed better than all
expectations and did that despite an improving yet sluggish
economy," said Andre Bakhos, managing director at Janlyn Capital
LLC in Bernardsville, New Jersey.
    The Dow Jones industrial average was up 5.17 points,
or 0.03 percent, at 16,483.58. The Standard & Poor's 500 Index
 was down 1.97 points, or 0.11 percent, at 1,839.43. The
Nasdaq Composite Index was down 9.66 points, or 0.23
percent, at 4,146.93. 
    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.  
 
    In Europe, 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
was down 0.3 percent at 1,310.14 but still set to post a gain of
16 percent for the year, its best annual performance since 2009.
    
    Japanese 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 $1.3804, short
of $1.3892 set on Friday - which was the highest since October
2011. The single European currency also strengthened against the
yen, rising 0.4 percent to 145.08 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 declined 
to 2.98 percent early Monday after climbing to their 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 of
improving domestic growth in 2014, helped by other major
economies showing signs of improvement. 
    Global growth hopes lifted copper and aluminum
 to four- and two-month highs. Aluminum clung to a 0.8
percent rise but copper give up its earlier gains, last down
0.03 percent. 
    Safe-haven gold fell 0.6 percent to $1,205.80 an
ounce as the precious metal trudged toward its biggest annual
loss in over three decades. 
    In the oil market, Brent crude fell 88 cents or 0.8
percent at $111.30 a barrel, while U.S. oil futures shed
56 cents or 0.6 percent at $99.76.
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