* World shares gain 0.3 pct in subdued trade
* Disappointing BOJ action sends yen higher vs dollar
* Oil edges up, storm Sandy cut demand but may damage plant
* U.S. stock, bond markets closed on Tuesday due to storm
By Richard Hubbard
LONDON, Oct 30 World shares rose modestly in
subdued trading on Tuesday as investors waited to see the full
impact of a massive storm that wrought destruction across the
eastern United States.
The monster storm, code-named Sandy, was responsible for at
least 15 deaths, left millions without power, and has closed
much of New York's financial district.
Wall Street shut for a second day, and bond trading was also
halted as the focus switched to whether markets would be able to
resume activity on the final day of the month on Wednesday,
which is key to pricing investment portfolios.
The FTSEurofirst 300 index of top European shares
was up 0.75 percent at 1,101.75 points and, after gains earlier
in Asia, the MSCI world equity index had risen
0.3 percent to 328.86 points.
U.S. stock index futures, which kept trading in Europe,
edged lower, but volumes were very light.
"We're a bit lost without Wall Street, frankly," said
Alexandre Tixier, technical analyst at TradingSat, in Paris.
Across European stock markets, attention was on corporate
earnings, with results from well known names like Germany's
Deutsche Bank, Swiss banking giant UBS and
oil major BP lifting prices. UBS shares leapt over four
percent as it confirmed a plan to cut 10,000 jobs.
Britain's FTSE 100 index was up 0.75 percent,
Germany's DAX index up 0.9 percent and Switzerland's
SMI index up 0.5 percent.
MODEST BOJ MOVE
In the currency markets, which remained open, the dollar
lost ground against a resurgent yen after the Bank of Japan
eased policy less aggressively than had been hoped for at its
regular policy setting meeting.
The BOJ increased its monetary stimulus for a second month
running, this time by 11 trillion yen ($138.5 billion),
disappointing many who had positioned for a more aggressive
"It was a very sceptical response to the BOJ policy meeting,
made worse by the fact they have revised lower the growth and
inflation outlook," said Jane Foley, senior currency strategist
at Rabobank. "That has seen the yen unwind a lot of the softer
tone we saw going into this meeting."
The dollar hit a one-week low of 79.25 yen and was
down 0.3 percent against a basket of major currencies at 79.67
The weaker dollar helped the European common currency climb
0.4 percent to $1.2958, while news the Spanish economy
had shrunk slightly less than expected in the third quarter and
Italy's borrowing costs had fallen also supported the euro.
But gains for the single currency are expected to be limited
by continuing questions over whether Greece can agree a deal
with its creditors, and when Spain might request financial aid.
Spain's economy contracted for a fifth straight quarter
between July and September, and prices rose, according to new
data, keeping pressure on the government to take some action as
the prospect of further civil unrest grows.
"Spain's economy is suffering terribly, which will continue
to hit government revenues, and a modest decline in bond yields
will not solve the problem," said Kit Juckes, strategist at
Prime Minister Mariano Rajoy has maintained an ambivalent
stance towards applying for a politically embarrassing rescue
that would kickstart an ECB bond-buying programme and ease
Investors, too, seem willing to wait; 10-year Spanish bond
yields were little changed at 5.67 percent.
German government bonds, the benchmark of European
fixed-income markets, were also mostly flat.
Italy was even able to sell 7 billion euros of new five- and
10-year government bonds at its lowest cost since May 2011.
Italian 10-year yields dipped 1 basis point
lower on the day to 5 percent, having risen about 25 basis
points in the last two weeks.
In oil markets, prices were edging higher as traders awaited
news of the damage inflicted by Sandy on refineries and
pipelines on the U.S. east coast, though weaker demand from the
storm-hit region capped gains.
Brent crude for December rose 8 cents to $109.36 a
barrel, recovering from a fall to $108.75 earlier, while U.S.
crude for December was up 60 cents at $86.14.
U.S. gasoline futures were little changed at $2.7530
a gallon, after climbing more than 5 cents on Monday on
expectations of tighter supply.
"People are just holding back a little bit to see if there's
any real damage and impact, and at the moment it's too hard to
see," said Bjarne Schieldrop, an analyst at SEB in Oslo.