* World shares at 17-month highs, European stocks up 0.5 pct
* Wall Street wavers after strong two-day rally
* Euro at multi-month highs vs dollar, yen
* Brent crude rises above $109 a barrel
By Herbert Lash
NEW YORK, Dec 19 World shares rose to 17-month
highs and the euro surged on Wednesday as hopes grew for a
year-end budget deal in the United States and for further
monetary stimulus from the Bank of Japan.
Wall Street opened higher but soon faltered as top European
company shares scaled fresh 18-month highs on expectations the
U.S. "fiscal cliff" will be averted.
"We're starting to see signs that there will be a deal on
the 'fiscal cliff,' but after two strong days and with a fair
amount of uncertainty left, people are just taking money off the
table," said Peter Tuz, president of Chase Investment Counsel in
A key business survey in Germany bolstered investor
sentiment by suggesting that Europe's biggest economy was likely
to bounce back quickly from a slowdown.
The growing confidence in the outlook lifted the euro to a
16-month high against the yen and an 8-1/2 month peak versus the
U.S. dollar, while Brent oil rose towards $110 a barrel.
Strong results from Oracle lifted U.S. technology shares but
the S&P 500 struggled to extend its best two-day run in a month.
"Continuing loose monetary policy from the major central
banks and apparent progress in overcoming the (euro zone) debt
crisis has prompted a significant improvement in sentiment,"
said Bernd Hartmann, head of investment research at VP Bank.
The Dow Jones industrial average was up 4.91 points,
or 0.04 percent, at 13,355.87. The Standard & Poor's 500 Index
was down 0.06 points, or 0.00 percent, at 1,446.73. The
Nasdaq Composite Index was up 4.88 points, or 0.16
percent, at 3,059.41.
The better tone in global markets was supported by the U.S.
Federal Reserve's efforts to boost the U.S. recovery, signs of
growing momentum in China and talk that Japan is set for a
policy shift to lift itself out of recession.
The latest German Ifo Institute survey of 7,000 firms
bolstered this sentiment by finding that business confidence had
improved for a second month running in December, in part because
of better export prospects.
The brighter outlook has pushed MSCI's all-country world
equity index to levels last seen in July 2011.
The index rose 0.5 percent on Wednesday, on track for its fifth
straight weekly gain.
In Europe, London's FTSE 100, Frankfurt's DAX
and France's CAC-40 indexes rose by up to 0.5
percent. The FTSEurofirst 300 index rose 0.46
percent to 1142.69.
The euro rose 0.51 percent to 1.3293 to the dollar,
a level not seen since April 2011, while against the yen
, it gained 0.9 percent to 112.37, its highest since
The dollar index fell to 79.077, after hitting a
two-month low of 79.008.
Earlier, widespread expectations the Bank of Japan will
expand its current asset-buying programme at the end of a
two-day policy meeting on Thursday had sent Tokyo's Nikkei index
up 2.4 percent and through the 10,000 point level for
the first time since April.
The benchmark 10-year U.S. Treasury note rose
6/32 in price to yield at 1.7996 percent.
Brent crude was up 62 cents to $109.46 a barrel as
it headed toward its highest close in two weeks. U.S. oil
gained 18 cents to $88.11.