* European shares at 5-1/2 year high, Unilever rallies
* Chinese money market rates ease on c.bank injection
* Dollar rises on speculation of further tapering
* German Jan ZEW sentiment indicator unexpectedly falls
* Turkish lira hits record low on no-change decision
By Carolyn Cohn
LONDON, Jan 21 European shares hit fresh 5-1/2
year highs on Tuesday, boosted by easier Chinese money markets
and a strong performance from Unilever, while the dollar rose on
a report the Federal Reserve would again trim its bond buying
Chinese money market rates fell after the central bank added
more than 255 billion yuan ($42 billion) into the financial
system, easing concerns another credit crunch was underway less
than a month after a late December squeeze.
In Europe, a fourth-quarter recovery in emerging markets
sales boosted consumer goods maker Unilever s
2013 results and sent its shares up nearly 4 percent.
European shares hit 5-1/2 year highs, although
world stocks were steady overall.
U.S. stock futures were also pointing higher, with the S&P
500 up 0.26 percent and the Dow up 0.5 percent.
The euro fell towards Monday's two-month troughs
after the ZEW indicator of German economic sentiment for January
unexpectedly fell to 61.7 after surging to 62.0 in December.
The key Euribor lending rate held steady, however, as banks
slowly reduce their reliance on European Central Bank funding
and turn to the market again in a sign of growing confidence.
The ECB has pledged to intervene should the rise in bank-to-bank
lending rates that underpin borrowing costs across the economy
The dollar was broadly stronger, bouncing to 104.68 yen
after the Wall Street Journal reported the Federal
Reserve is on track to trim its bond-buying for the second time
in six weeks, paring back by $10 billion to $65 billion a month.
A lacklustre U.S. jobs report had not diminished the central
bank's confidence in the economy, wrote Fed watcher Jon
Hilsenrath. Investors suspect he has an inside line to policy
makers and put a lot of weight on his opinion.
Ten-year U.S. Treasury yields rose 2.5 basis points to 2.85
percent following a U.S. market holiday on Monday,
while German government bond futures fell 4 ticks.
The yen was also under pressure after Japan's central bank
began a two-day policy meeting at which it is expected to keep
its massive quantitative easing programme unchanged.
"We do share the view that monetary policy in the U.S. will
be less accommodative and that is helping the dollar against the
yen," said Manuel Oliveri, FX strategist at Credit Agricole.
"On the yen side, there is some positioning that the Bank of
Japan may sound more dovish at the end of its policy meeting
Brent crude jumped $1.42 to $107.77 a barrel as the
International Energy Agency raised its forecast for global oil
demand this year, citing accelerating economic growth.
Turkey's lira plunged to a fresh record low after the
central bank left interest rates unchanged, defying some market
expectations for a rate rise, given high inflation and the weak
The lira has hit a string of record lows as a government
corruption scandal undermines already fragile investor
confidence. Turkey's huge current account deficit, which it
relies on foreign investment to finance, means its economy is
seen as highly vulnerable to the withdrawal of Fed stimulus.
Gold steadied at $1,244.10 an ounce, after hitting
its highest level since mid-December at $1,259.85 on Monday.