GLOBAL MARKETS-Corporate results boost stocks, euro falls on inflation data

Tue Apr 29, 2014 10:40am EDT

* Upbeat earnings activity boosts U.S., European shares
    * Euro falls on below-forecast German inflation data
    * Draghi cools ECB QE talk; Fed to begin policy meeting
    * U.S. bond yields rise as Apple prepares huge bond deal

 (Updates with U.S. markets, adds quote, changes dateline;
previous LONDON)
    By Richard Leong
    NEW YORK, April 29 (Reuters) - World stock indexes rose on
Tuesday on well-received corporate earnings, while the euro
slipped as weaker-than-expected German inflation data kept alive
chances of more stimulus from the European Central Bank.
    Worries about Ukraine moved to the back burner, for now,
after the United States and European Union imposed more
sanctions on Russia for its role in backing the separatist
movement in eastern Ukraine.  
    Some relief that the West's broadened sanctions on Moscow
were limited led some investors to step back into stocks and
other risky assets and to pare their safe-haven holdings in gold
and U.S. and German government debt. 
    U.S. and German benchmark yields  
rose to 2.71 percent and 1.51 percent, respectively. U.S. bond
yields were also under pressure on a huge bond offering from
iPhone maker Apple.  
    "The Ukraine situation played an important role here. The
tension there has been diffused for now. You have some decent
earnings in the U.S. and Europe as well," Robbert Van Batenburg,
director of market strategy at Newedge USA LLC in New York, said
of the gains in equities.
    Upbeat news from Finnish telecom giant Nokia and
German chipmaker Infineon inspired European stock
markets, while encouraging results from U.S. drugmaker Merck
 and mobile provider Sprint helped Wall Street open
higher.  
    The equity-friendly tone to markets on Tuesday was helped by
news Britain's that economy grew at a solid 0.8 percent pace in
the first quarter, giving an annual growth rate of 3.1 percent,
the fastest since 2007. 
    Private data showed U.S. home prices grew at a solid clip in
February, while Americans' confidence in the economy dipped in
April from the highest in more than six years set in March.
  
    In early trading, the Dow Jones industrial average 
rose 68.10 points, or 0.41 percent, at 16,516.84. The Standard &
Poor's 500 Index was up 4.85 points, or 0.26 percent, at
1,874.28. The Nasdaq Composite Index was up 4.54 points,
or 0.11 percent, at 4,078.94. 
    The FTSEurofirst 300 index of top European shares
gained 1 percent, while Tokyo's Nikkei earlier closed
down 1 percent.  
    With the gains in the U.S. and Europe, the MSCI world equity
index, which tracks shares in 45 nations, rose 
0.4 percent.
    Investors also took cues from the mixed signals on whether
European central bankers will ease policy in the coming weeks
and months to fight off the threat of deflation.
    ECB President Mario Draghi told German lawmakers on Monday
that further monetary easing in the form of bond-buying remains
some way off, and the ECB pumped more liquidity into the market
on Tuesday through its weekly money market operations.
    German annual inflation accelerated 1.1 percent in April but
less than the 1.3 percent rise expected. A report due on
Wednesday is expected to show inflation in the euro bloc picking
up to 0.8 percent in April, but that would still be well below
the ECB's medium-term target of just below 2 percent.
 
    "This will spark hopes the ECB will conduct another round of
unconventional policy. The ECB may not have a choice," Newedge's
Batenburg said.
    Central bank purchases of bonds, such as those the Federal
Reserve has conducted and has begun to dial back, are aimed to
hold down long-term interest rates and bolster economic
activity. But they also erode the country's currency.
    The euro was down 0.2 percent at $1.3821 and off
about 0.1 percent at 141.89 yen. 
    The dollar index, a measure of the greenback's value against
a basket of currencies, was little changed at 79.763.
 
    As traders speculate on the ECB's next move, the Fed will
begin a two-day policy meeting on Tuesday, and is expected to
trim its bond-buying stimulus further. 
    In commodity markets, Brent crude was last up $1.09,
or up 1.01 percent, at $109.21 a barrel, and U.S. crude 
was up $1.17, or up 1.16 percent, at $102.01 a barrel. 
    Spot gold prices rose $1.9 or 0.15 percent, to
$1,297.50 an ounce. 

 (Reporting by Richard Leong; additional reporting by Jamie
McGeever, Marius Zaharia and Tricia Wright; Editing by Alison
Williams and Dan Grebler)
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