* European shares edge high as ECB momentum continues
* Euro money market rates hit lowest on record, euro drops
* Dollar index edges up on higher yields
* Carry trades keep Aussie near 6-mth high vs euro
By Marc Jones
LONDON, June 10 An all-time low for euro zone
money market rates bolstered the region's bond rally and held
down the euro on Tuesday, providing clear proof that the
European Central Bank's latest support measures are gaining
The steady drip-feed of global stimulus also kept world
shares inching towards an all-time high as a
record high Wall Street and a three-year peak for Asia left them
looking for a fifth day of back-to-back gains.
U.S. stocks were was expected to take a
breather when trading resumes later, but European stocks
continued to shuffle forward.
Germany's Dax had secured a firm hold above the
psychological 10,000 points level as afternoon trade began,
while a government reshuffle in Greece helped shares extend
their gains over the past weeks to a staggering 25 percent
Last week's ECB cut in interest rates and its move to start
charging banks who park spare cash ensured the impact continued
The euro tumbled back towards a four-month low against the
dollar at $1.3540, while there were new lows for Portuguese and
Irish borrowing costs , two of the
countries bailed out during the euro debt crisis.
The rate banks in the euro zone charge one another to borrow
overnight - known as EONIA - hit an all-time low of
0.053 percent too, a move the ECB will hope will feeds to firms
and consumers, boosts growth and prevents deflation setting in.
"Broadly what the ECB has done has been pro-risk," said
Alvin Tan, a currency strategist at Societe Generale in London.
"Quite apart from the currency moves we have seen,
volatility is just plunging and that is all part of the story."
The global appetite for riskier assets has also been whetted
by last week's upbeat U.S. non-farm payrolls jobs report.
Wall Street resumes later with the S&P 500 on a run
of four straight record closes and the Dow on its third.
Aside from the ECB's recent bold moves, there was other
reassuring news from the euro zone on Tuesday too.
Italian industrial output rebounded more than expected in
April, and although France's recovery, which is lagging that of
its euro zone peers, only marginally improved,
Barclays said the ECB's latest moves may have had a positive
impact on inflation expectations.
"Admittedly, this is based on two days' reaction, but it
appears that the ECB is succeeding towards their goal,"
Barclays' Chris Walker and Marvin Barth said.
In Asia, there was more muted market reaction to Chinese
inflation data as it remained well within the government's
comfort zone, giving room for the government to launch fresh
stimulus measures if needed to support the economy.
China's consumer prices rose 2.5 percent in May from a year
earlier while producer prices fell 1.4 percent.
"No surprises again from May inflation data. Producer prices
stabilised ... pointing to muted inflationary pressure," said
Andy Ji, senior Asian currency strategist at Commonwealth Bank
of Australia in Singapore.
Nevertheless, the risk appetite remained strong with MSCI's
broadest index of Asia-Pacific shares ex Japan
ending up 0.6 at its highest since June 2011.
Chinese, Indonesian and Korean shares all rose more than 1
percent, though Tokyo's Nikkei and stocks in India
bucked the trend as investors cashed in on some of the
sizeable gains both have seen recently.
Among the major currencies, the dollar continued to benefit
from rising U.S. Treasury yields as the benchmark 10-year rate
topped 2.62 percent.
The dollar index, which measures the greenback's
strength against a basket of key currencies, climbed 0.2 percent
after a similar gain on Monday, though it was slightly lower on
the day against the yen at 102.32.
Yield hungry investors also piled into carry trades, pushing
the Australian dollar to a near a six-month high against the
euro with also gave a lift to its antipodean cousin
the kiwi dollar.
In commodities, the wave of risk appetite sweeping through
markets kept safe-haven gold pegged down at $1,254.60 an ounce
and pushed up Brent oil 30 cents to $110.30 a barrel.
A breakdown in strike talks in South African pushed platinum
to a 3-year high while fears about a crackdown into metal
financing in China sent copper to a new one-month low.
(Editing by Alison Williams)