* World shares rise as Alcoa points to solid global demand
* Dollar gains versus yen on expectations of BOJ easing
* Oil slips before Chinese trade data due Thursday
By Richard Hubbard
LONDON, Jan 9 World shares staged a modest
recovery from two days of losses on Wednesday after aluminium
giant Alcoa opened the U.S. earnings season with an
optimistic outlook for global demand.
However, investors were in a cautious mood before European
and British central banks hold policy meetings on Thursday, when
Spain also tests appetite for peripheral euro zone debt and
China releases trade data.
Alcoa, the largest aluminium producer in the United States,
rose 1.3 percent in after-hours trade after it reported a
fourth-quarter profit in line with Wall Street expectations and
revenues that beat forecasts.
The results lifted Asian stocks and pushed Europe's FTSE
Eurofirst 300 index up around 0.2 percent, leaving the
MSCI world equity index with a gain of 0.1
percent. London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were flat to 0.3 percent higher.
U.S. stock index futures suggested a small gain on Wall
Street as well when it opens.
Corporate profits for the fourth quarter are generally
expected to be higher than in the lacklustre previous three
months, but analysts' estimates are down sharply from where they
were in October.
"Expectations are quite low going into the earnings season
as we saw a lot of downward guidance in the past few months.
There is potential for an upside surprise to come through," said
Robert Parkes, equity strategist at HSBC Securities.
Investors also remain worried about the effect on corporate
performance of congressional negotiations over the U.S. budget
deficit and looming discussions on raising the government's debt
ceiling, which could hurt its credit rating.
DEBT DEMAND SURGE
In the fixed income market German government bond prices
gained following a successful auction of new five-year debt,
which continued a trend of strong sales in Europe this week with
Austria, the Netherlands and Ireland all tapping the market.
Orders for a new 10-year bond from Belgium also reached 4.5
billion euros ($5.9 billion), according to a bank managing the
deal, as investors searching for better returns overwhelm the
But a big test for the market looms on Thursday when Spain
and Italy hold their first debt sales of the year, revealing
the depth of demand for peripheral euro zone debt.
The Spanish auction could also offer clues on the timing of
a much-anticipated request by the government for international
Surging demand for high grade corporate debt in the United
States has put the new issue market on course for a record week.
Thomson Reuters IFR said new issue volume totalled a massive $33
billion by the end of Tuesday, and only $7.6 billion more was
needed to match the previous weekly record of $40.6 billion.
The dollar climbed against the yen, moving back towards a
2-1/2 year high hit last week, on expectations of a much bolder
monetary easing from the Bank of Japan at its next meeting later
The U.S. currency was up 0.5 percent at 87.47 yen,
above a near one-week low of 86.82 hit earlier in Tokyo.
"No one is going to want to be short yen going into the BOJ
meeting," said Derek Halpenny, European head of FX research at
Bank of Tokyo-Mitsubishi.
Sources familiar with the BOJ's thinking told Reuters the
central bank was likely to adopt a 2 percent inflation target at
the meeting, double its current goal, and issue a statement with
the government promising to pursue bold monetary easing steps.
The euro was slightly lower at $1.3050, easing after
German industrial output rose less than expected in November.
The data was unlikely to change the ECB's thinking, with
most analysts expecting its Governing Council to keep interest
rates on hold on Thursday, though some believe rates will be cut
later this year.
CHINA DEMAND EYED
Brent crude oil slipped around 0.15 percent to below $112
per barrel as the market awaited the trade data from
China, the world's biggest energy consumer, and the outcome of
the ECB meeting.
"What we're seeing in the oil markets is the cautious
sentiment playing up ahead of some key economic events this
week," said Ker Chung Yang, senior investment analyst at
Phillips Futures in Singapore.
However, iron ore jumped to its highest level since October
2011, stretching a rally that has lifted prices by more than a
third since December as China replenished stockpiles while
supply in the spot market remained limited.
Iron ore, a raw material used to make steel, has now risen
83 percent since falling to below $87 a tonne in September.