(Corrects 1st paragraph to show European shares near 6-1/2-year
* Renewed global growth concerns cap share gains
* Iraq concerns also cool risk appetite
* U.S. crude futures surge to three-month highs
By Emelia Sithole-Matarise
LONDON, June 12 European shares held steady near
6-1/2-year highs on Thursday, with gains limited by concerns
over the pace of global growth, while oil prices hit a
three-month peak on escalating violence in Iraq.
A cut in the World Bank's global growth forecast prompted
investors to book profits from recent gains which propelled
European, U.S. and Asian shares to multi-year and record peaks.
The FTSEurofirst 300 index of top European shares
was flat at 1,392.07 points, hamstrung by a dip in miners Rio
Tinto and BHP Billiton. The index was still
within sight of the 1,398.65 peak hit earlier this week.
"After such a good rally, it's not the time to buy right
now, it's better just to sit on your gains. The market is quite
vulnerable to negative news at the moment," said Philippe de
Vandiere, analyst at Altedia Investment Consulting, in Paris.
"On the longer-term however, earnings in Europe will start
to recover in the next few months, which should lift stocks
Some analysts said anxiety about the violence in Iraq was
also undermining investors' appetite for riskier assets.
Fighting in Iraq also prompted concerns about the oil supply
outlook, lifting U.S. crude futures 0.8 percent to
$105.19 a barrel, their highest since early March.
Militants from an al-Qaeda splinter group captured Mosul,
the country's second largest city, and closed in on the biggest
oil refinery in Iraq.
The insurgency has also hurt financial markets in
neighbouring Turkey, where stocks fell 3.3 percent and
the lira tumbled 1.7 percent on Wednesday as the
militants took 80 Turkish nationals hostage.
Among major currencies, the New Zealand dollar jumped 1.3
percent after the country's central bank raised interest rates
and retained a hawkish bias, surprising some investors who had
bet on a slower pace of rate hikes.
The kiwi surged more than one percent to $0.8670.
Other major currencies were little changed with the euro
still stuck near the four-month low hit after the European
Central Bank cut rates last week.
The euro traded at $1.3530, compared with a low of
$1.3503 hit on Thursday. The euro has fallen almost 1 percent
this week as the effects of the ECB's easing policies spread
through markets but the jury remains firmly out on whether the
bank has managed to turn the tide.
A stronger dollar on the basis of improvement in the U.S.
economy and a resulting rise in Treasury yields was many banks'
base scenario for 2014 at the start of the year.
"It does feel like lower yields are starting to weigh on the
euro," said Paul Robson, a currency strategist at RBS in London.
"I don't quite want to jump on the bandwagon yet - the
reasons for the euro's strength this year have not quite gone
away. Yes it may go through $1.35, but I don't think it will go
much beyond that."
In fixed income, peripheral euro zone bond yields retreated
further from record lows as investors made way in their
portfolios to take down bond sales from Italy and Spain.
Spanish 10-year bond yields were up 4 basis
points at 2.67 percent as Madrid also prepared to ease its hefty
upcoming debt repayments by switching expensive debt issued at
the height of the crisis for a new 10-year bond.
Equivalent Italian yields were up a similar
amount at 2.83 percent before an auction of up to 8.5 billion
euros of three-, seven-, and 30-year bonds.
(Additional reporting by Blaise Robinson in Paris and Patrick
Graham; Editing by Catherine Evans/Ruth Pitchford)