* Improving global growth outlook supports world shares
* U.S. stocks mixed as earnings season picks up pace
* Yen weak as Japan's Abe piles pressure on BOJ to ease
By Richard Hubbard
LONDON, Jan 14 The euro hit an 11-month high
against the dollar on Monday as fading prospects of an interest
rate cut in Europe bolstered demand, while world shares
consolidated recent gains prompted by an improving global growth
The common currency was up 0.2 percent at $1.3365, having
hit a high of $1.3404 earlier for a hefty 2.5 percent
jump since European Central Bank President Mario Draghi dampened
expectations of further monetary policy easing in the near term.
Europe's FTSE Eurofirst 300 index of top companies
was steady but just shy of a two-year high, while London's FTSE
100, Frankfurt's DAX and Paris's CAC-40
all traded around 0.1-0.4 percent higher.
"It does seem as if markets are in a mood to go up
regardless of any worries, and there certainly doesn't seem to
be too much bad news at the moment," said Chris Beecham, markets
analyst at IG.
U.S. stock index futures pointed to a mixed open on Wall
Street where investors were focused on corporate earnings due
out as the first big reporting week of 2013 gets underway.
Equity markets have risen and most major currencies gained
against the dollar this year after U.S. lawmakers struck a deal
on taxes, easing fears of a sudden fiscal tightening that would
slow the economy. Chinese data, which has begun to show a pickup
in momentum in the world's second largest economy, has added to
Japan, the third largest economy, is embarking on a new
strategy to lift itself out of recession, weakening the yen
substantially but boosting Tokyo stocks.
The MSCI world equity index traded near an
18-month high on Monday although it didn't push higher, while
the dollar's value against a basket of major currencies
floated around its lowest levels since the start of the year.
Chicago Federal Reserve chief Charles Evans, a voting member
of the Fed's policymaking committee this year, underlined the
better outlook by forecasting the U.S. economy would grow 2.5
percent in 2013 and 3.5 percent in 2014.
Evans added that markets could be confident the U.S. central
bank would take action to boost the recovery without letting
inflation take hold, although he did not refer to any further
Fed Chairman Ben Bernanke will speak on the outlook later in
the day and investors will scrutinise his remarks for any clues
on how much longer the Fed's bond purchase programme will last.
Any suggestion that the Fed is in no hurry to end its
quantitative easing programme would probably lead to the dollar
softening further against higher-yielding currencies such as the
Australian dollar and those of faster-growing emerging
Meanwhile the Japanese yen continued to sink against the
other major currencies, touching a fresh a 2-1/2-year low of
89.67 yen against the dollar, on expectations that a
round of aggressive monetary easing is coming soon in Japan.
New Prime Minister Shinzo Abe reiterated on Sunday his calls
for the Bank of Japan to set a 2 percent inflation target and
pursue bolder monetary easing to end nearly two decades of
Abe, who has already announced a huge budget stimulus for
the Japanese economy, also said he would be appointing a new
head of the central bank who shares his views when Governor
Masaaki Shirakawa's term ends in April.
"The confirmation that there's going to be a push for a new
governor (and) that new governor is going to have a mandate of 2
percent inflation - that plus the fiscal stimulus is a major
negative for the yen," said Callum Henderson, global head of FX
research for Standard Chartered Bank in Singapore.
Tokyo markets were closed on Monday for a holiday but MSCI's
broadest index of Asia-Pacific shares outside Japan
rose a modest 0.3 percent on the statement,
remaining near a 17-month peak set on Friday.
The growing optimism over the outlook for the world's
biggest economies helped commodity prices to recover from last
week's decline. Oil also benefited from a resurfacing of fears
about a disruption of supply from the Middle East.
A cut in Saudi Arabian production last month, pipeline
sabotage in Yemen and a weather-related drop in Iraqi shipments
have reduced output, while fighting in Syria and Iranian naval
exercises in the Strait of Hormuz reminded investors of the risk
of wider disruption to Middle East supply.
Brent crude gained 50 cents to $111.14 a barrel,
while U.S. crude rose 35 cents to $93.91 a barrel.
Copper edged up 0.3 percent to $8,069.50 a tonne and
gold was up 0.6 percent at $1,672.70 an ounce.