* World shares slide China economic plans lacks detail
* Dollar edges toward 100 yen on Fed taper speculation
* U.S. Treasury yields extend gains, Bunds follow
* Firmer dollar keeps commodities under pressure
By Richard Hubbard
LONDON, Nov 12 China's plan to broaden economic
reforms failed to give a lift to world shares on Tuesday as
higher U.S. government bond yields and growing talk the Federal
Reserve will soon scale back its stimulus weighed on sentiment.
U.S. stock index futures pointed to further weakness ahead
on Wall Street where investors were looking for policy clues
from a number of Fed speakers.
China's leaders promised to deepen economic reforms and let
markets play a bigger role in resource allocation in a new
policy blueprint unveiled at the end of a four-day meeting of
key officials from the ruling Communist Party.
"They are looking to break away from government control,
allowing the markets to take the lead," said Dong Tao, chief
regional economist for Non-Japan Asia at Credit Suisse.
"This is a revolutionary philosophy, by Chinese standards."
However, the government communique contained little to shift
the market's attention away from its preoccupation with the
timing of the Fed's next policy steps, prompting world shares
to edge lower after two days of gains.
The speculation that the Fed could soon begin to taper its
$85 billion-a-month in bond buying has grown since last week's
surprisingly strong U.S. jobs data, driving the dollar closer to
100 yen and lifting it toward a two-month peak against a
basket of major currencies.
The prospect of an early policy shift has also caused a
sharp rise in U.S Treasury yields as central banks in the euro
zone and Japan pursue looser policies to help growth, widening
the interest rate gap in favour of the dollar.
U.S. 10-year note yields were up 2 basis points at 2.76
percent in European trading.
Traders said if the benchmark U.S. yield stayed above 2.75
percent for a sustained period it could herald a move towards 3
percent, last seen in early September, when markets initially
anticipated the Fed would begin to reduce its asset purchases.
German 10-year government bonds yields were being dragged
higher by the move in Treasuries, rising 1.7 bps to 1.77 percent
and close to levels seen just before the European
Central Bank cut rates on Thursday.
A thin economic data calendar left the debt market awaiting
speeches from Fed officials Dennis Lockhart and Narayana
Kocherlakota for further hints on when the U.S. central bank
might start trimming its $85 billion-a-month of bond-buying.
"It will be interesting to see whether they indicate more of
a shift towards QE tapering starting in December or in January,"
said Mathias van der Jeugt, a strategist at KBC.
SHARE GAIN LOCK-IN
Europe's shares meanwhile were edging down from the
five-year highs seen last week as low volumes and a weak run of
corporate earnings results encouraged many investors to book
some of the gains made in this year's strong rally.
In the current earnings season about half of the Stoxx
Europe 600 companies that have reported so far have
missed profit forecasts, and nearly two-thirds have missed
revenue forecasts, according to Thomson Reuters StarMine data.
"Some are getting nervous about the lack of volume so, if
you've got any decent performance, you're probably not going to
get much more upside from here," said Ioan Smith, managing
director of KCG Europe.
Europe's broad FTSEurofirst 300 index has risen
nearly 14 percent this year helped by the ECB's easier monetary
policy and signs of a recovery across the crisis-hit region.
In commodity markets, China's dominance as a consumer of
many raw materials had kept markets in a cautious mood pending
Beijing's announcement though the firmer greenback was keeping
prices of the dollar-denominated assets under pressure.
Three-month copper on the London Metal Exchange
slipped 0.4 percent to $7,140 a tonne, while gold dropped 0.25
percent to $1,285 an ounce.
Brent crude oil gained in volatile trade to be above $106 a
barrel, adding to its gains in previous two sessions as
dealers awaited data on U.S. stock piles due out later.