* Focus turns to Fed stimulus prospects after government
* China Q3 growth quickens to 7.8 pct yr/yr
* World shares at 5-year high, Google hits $1,000 mark for
* Euro hits 8-1/2-month high vs dollar
By Herbert Lash
NEW YORK, Oct 18 Expectations the Federal
Reserve will keep its stimulus in place for longer because of
the U.S. fiscal stand-off's impact on the economy on Friday
pushed a measure of global equity markets to a fresh five-year
high and the dollar to an eight-month low.
Better-than-expected results from Google Inc and
Morgan Stanley also lifted stocks on Wall Street, with
shares of the Internet search company rising 13 percent at one
point to breach the $1,000 mark for the first time.
An acceleration in China's giant economy provided a further
boost for stock markets, as well as for commodities such as oil
and copper, as the prospect of an extended spell of super-easy
money and improving growth buoyed investors.
MSCI's index tracking the performance of 45 countries
rose 0.57 percent to highs last seen in May 2008,
while a European index, the Stoxx Europe 600 gained for
a seventh successive day, its longest winning streak this year.
A last-minute deal by U.S. lawmakers this week to avert a
debt default and re-open shuttered government offices also has
bolstered investor confidence, pushing the broad S&P 500 to a
record close on Thursday.
On the company earnings front, so far 85 companies
representing 25.8 percent of S&P 500's market capitalization
have reported third-quarter results, with earnings beating
estimates by an average of 4.2 percent.
Google was up 12.4 percent at $999.26, while Morgan Stanley
rose 2.5 percent to $29.64.
"Surprises have been broad-based with all of the 9 sectors
surpassing their forecasts," said Jonathan Golub, chief U.S.
market strategist at RBC Capital Markets in New York.
The Dow Jones industrial average was down 11.56
points, or 0.08 percent, at 15,360.09. The Standard & Poor's 500
Index was up 5.78 points, or 0.33 percent, at 1,738.93.
The Nasdaq Composite Index was up 31.82 points, or 0.82
percent, at 3,894.97.
Traders were continuing to sell it against a broad basket of
currencies from advanced and emerging economies, leaving the
dollar index at 79.580 on expectations the Fed may delay
scaling back its monetary stimulus.
Analysts said concerns about the negative impact on the U.S.
economy and the likelihood the Fed would leave its bond-buying
program intact until well into next year would weigh on the
dollar, leaving the euro the potential to rise towards $1.40.
"The real economy has been negatively impacted by the
government shutdown and uncertainty of the debt crisis, all of
which pushes out eventual Fed policy normalization which is bad
for the dollar," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington.
The dollar index, which measures the dollar's value
against a basket of currencies, was down 0.05 percent at 79.604.
The euro rose to 0.05 percent tp $1.3682.
Brent crude futures rose toward $110 a barrel, supported by
a weak U.S. dollar and third quarter GDP growth data from China
which matched consensus expectations.
Brent crude was up 46 cents at $109.57 a barrel,
while U.S. crude oil was up 32 cents at $100.99.
Investors were relieved by data showing China's economy grew
7.8 percent in the third quarter, its fastest pace this year and
meeting expectations, as firmer foreign and domestic demand
lifted factory output and retail sales.
China's CSI300 index climbed 0.7 percent, while
Australian shares jumped to their highest level since
June 2008. Australian exports are closely linked to China's
German Bunds were on course for a steady end to a
week of hefty gains, while in the euro zone periphery only
Portugal was in the red along with its main share market
as its debt concerns remained prominent.
Benchmark 10-year U.S. Treasuries rose 2/32 to
yield 2.5777 percent.
In commodity markets, China's stronger growth helped copper
climb 0.38 percent to 7,257.50 a tonne.