GLOBAL MARKETS-World shares edge up after BOJ move, but data weighs

Tue Feb 18, 2014 11:11am EST

* Japanese shares rally after BoJ move, yen weakens

* MSCI World index has pre-EM selloff peak in sight

* European shares dip after recent gains

* Gold weakens, but crude oil rallies

By Ryan Vlastelica

NEW YORK, Feb 18 (Reuters) - Stock markets around the world edged higher in volatile trading on Tuesday following a fresh round of stimulus from the Bank of Japan, though gains were limited by some tepid data following a recent rally.

The Bank of Japan maintained its expansionary monetary policy, extending special loan programs to help buoy economic growth. The news lifted Japanese shares 3.1 percent, but the rest of Asia was flat following action to rein in lending in China and hawkish rate-rise comments in Australia.

"The move by the Bank of Japan is important as it shows how central banks around the want world want to make sure economies don't slip back into recession," said Wayne Kaufman, chief market analyst at Rockwell Securities in New York. "That will be an overriding factor in any trading."

The MSCI World index was up 0.3 percent.

Economic data pointed to continued struggles around the globe, with German investor sentiment weaker and factory activity in New York state slowing in February. Also in the U.S., the February NAHB housing market index fell to 46 from 56 in January, following similarly weak reads last week on retail sales and the labor market.

Investors have been looking to economic data to justify the recent advance in equities, which has taken the S&P 500 back near record levels despite the U.S. Federal Reserve trimming its stimulus program in each of the past two months. The Fed will publish the minutes of its latest meeting on Wednesday, and market participants will scour the information for confirmation that the slowing will continue at a steady pace.

"We're getting overbought in the short-term, so it wouldn't be surprising to see a pause in stocks, especially since some of the data has been lukewarm," Kaufman said.

The FTSEurofirst 300 fell 0.4 percent after rising in eight of the last nine sessions. German Bund futures rose 0.1 percent, while Greek bond yields hovered around their lowest since the country's debt restructuring as international lenders said they would return to Athens this week to assess the delivery of economic reforms.

The Dow Jones industrial average was down 13.96 points, or 0.09 percent, at 16,140.43. The Standard & Poor's 500 Index was up 1.39 points, or 0.08 percent, at 1,840.02. The Nasdaq Composite Index was up 24.80 points, or 0.58 percent, at 4,268.83.

The benchmark 10-year U.S. Treasury note was up 8/32, with the yield at 2.714 percent.

YEN LOSES GROUND

The big loser from the BoJ action and subsequent bank-led Nikkei rally was the yen, which lost ground against all of its major currency peers, with the dollar gaining 0.3 percent.

The Japanese action had helped "reverse the recent dollar/yen bear trend" said Tom Levinson, currency strategist at ING, adding he thought 102.85/95 yen resistance would hold for now.

The U.S. dollar index fell 0.2 percent against a basket of currencies, while the euro rose 1.1 against the yen to post a new February high.

After initially weathering a bout of profit-taking, gold slid away from its near 3-1/2-month peak to fall 0.5 percent.

U.S. crude futures jumped 1.1 percent, boosted by robust demand for heating fuel, as well as a weaker dollar and supply disruptions in Libya. Brent crude rose 0.4 percent, nearing $110 a barrel.

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