Global stock buyers ignore Ukraine worries; euro jumps on ECB

NEW YORK Thu Mar 6, 2014 4:35pm EST

1 of 6. Pedestrians walk past an electronic board showing various stock prices, which are reflected in a polished stone surface, outside a brokerage in Tokyo January 24, 2014.

Credit: Reuters/Yuya Shino

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NEW YORK (Reuters) - World share markets rose on Thursday, supported by hopes that diplomatic efforts would cool the crisis in Ukraine, while the euro advanced to its highest level of the year after the European Central Bank signaled the euro zone needs no additional stimulus.

The latest developments in Ukraine, while still worrisome, have not caused investors to back away from stocks and risky investments on a global scale, as occurred on Monday.

"We had a bit of selloff in midday session and late afternoon but the fact the S&P 500 managed to set another record shows how much resistance this market has to geopolitical overhang that is clearly not over, resistance to bad news" said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

MSCI's world equity index .MIWD00000PUS, which tracks shares in 45 countries, was up 0.5 percent, and the MSCI emerging market index .MSCIEF rose 1.1 percent. Standard & Poor's 500 index .SPX hit a record high, propelled partly by a bigger-than-expected drop in U.S. weekly jobless claims.

Crimea's parliament voted to join Russia and its Moscow-backed government set a referendum in 10 days on the decision in a dramatic escalation of the crisis in the Ukrainian Black Sea peninsula.

U.S. President Barack Obama took steps to punish those involved in threatening Ukraine while European Union leaders agreed to suspend visa and investment talks with Russia.

These events reminded investors that the dispute is far from being resolved, but the risk of war has faded.

"Right now, the biggest threat has diminished," said Kathy Jones, fixed income strategist at Charles Schwab in New York.

European central bankers offset the geopolitical worries when, as expected, they left interest rates unchanged but offered no signal the ECB will implement unconventional measures such as bond purchases to avert the threat of excessively low inflation and underpin a fragile recovery.

The Bank of England, also meeting on Thursday, kept interest rates unchanged, seeking to give the economy more time to build momentum before removing stimulus.

The ECB's show of restraint on monetary stimulus bolstered the euro, boosting it to $1.3871, the highest since late December, according to Reuters data. It was at $1.3856 in late U.S. trading, up 0.9 percent from Wednesday.

The common currency bought 142.76 yen, up 1.6 percent from late on Wednesday but still below the high of 145.09 set on January 1.

European stocks were also supported by the ECB's decision. The FTSEurofirst 300 .FTEU3 index tracking Europe's top shares ended little changed at 1,344.56.

"European stocks have been quite resilient in the face of the multiple shocks, from the Fed's tapering to the Ukrainian crisis, even though risks seem limited," said Francois Chevallier, a strategist at Banque Leonardo in Paris.

On Wall Street, the Dow Jones industrial average .DJI rose 61.71 points or 0.38 percent, to 16,421.89, the S&P 500 .SPX gained 3.22 points or 0.17 percent, to 1,877.03 and the Nasdaq Composite .IXIC dropped 5.848 points or 0.13 percent, to 4,352.125. .N

The S&P 500 reached an intraday record high of 1,881.94.

Earlier, Tokyo's Nikkei .N225 closed up 1.6 percent.

Russian shares were a notable exception, falling nearly 1 percent , while the ruble weakened 0.3 percent against the U.S. dollar at 36.138 rubles.

Due to the resilience in stock prices, investors further pared their holdings in less-risky U.S. and German government bonds. The yield on U.S. 10-year Treasuries rose 4 basis points to 2.73 percent, while the yield on 10-year Bunds gained 5 basis points to 1.65 percent.

In the oil market, crude prices rose in a late bout of technical buying from earlier losses tied to reduced fears of war in Ukraine. Brent crude settled up 34 cents, or 0.32 percent, at $108.10 a barrel. U.S. crude settled up 11 cents, or 0.11 percent, at $101.56. <O/R>

Gold traded in a tight range with investors awaiting cues from Friday's U.S. jobs data and developments in Ukraine. It rose $13.2, or 0.99 percent, to $1,350.21 an ounce.

As markets calmed after gyrating on Russia-West tension this week over the Ukraine crisis, investors have shifted their focus to the U.S. payrolls data due 8:30 a.m. on Friday, which might show anemic hiring due to harsh winter weather across much of the country.

Economists polled by Reuters forecast U.S. employers likely hired 149,000 workers in February, compared with 113,000 in January, while the unemployment rate likely held at a five-year low of 6.6 percent.

The U.S. Labor Department offered an encouraging sign on the jobs market. It said on Thursday that first-time filings for unemployment benefits fell to a three-month low last week.

(Additional reporting by Nigel Stephenson and Joshua Franklin in London, Blaise Robinson in Paris, Hideyuki Sano in Tokyo, Ian Chua in Sydney and Angela Moon in New York; Editing by Catherine Evans, Dan Grebler and James Dalgleish)