* MSCI World share index at 4-1/2 year high on growth hopes
* UK stocks jump as BoE seen closer to easing
* Safe-haven assets lose appeal, gold at 6-month low
* U.S. stocks set to gain as Fed minutes eyed
By Richard Hubbard
LONDON, Feb 20 Signs of improving global
economic recovery lifted world shares to 4-1/2 year highs on
Wednesday, while sterling fell sharply when the Bank of England
revealed it came close to easing policy further to boost growth.
Minutes from their last meeting showed that members of the
BoE's Monetary Policy Committee were more inclined than had been
thought to voting for more asset purchases under its
quantitative easing (QE) programme and had even considered
cutting interest rates.
"Today's minutes have made us more comfortable with our view
that more QE is likely this year, particularly if GDP growth
continues to fall short of the Committee's expectations," said
Samuel Tombs, UK economist at Capital Economics.
The pound slumped to an 8-1/2-month low against the dollar
of $1.5336 <GBP=D4 >, while the euro gained to a near 16-month
high of 87.565 pence, up almost 0.9 percent.
Britain's main FTSE 100 stock index jumped 0.4
percent to 6,401.79 points, a fresh five-year high and above the
6.400 psychological level that some traders said could induce
bigger moves higher.
The gains offset slightly weaker levels across some other
European markets to lift the MSCI World Equity index by 0.25
percent to its best level since June 2008.
Global share markets had surged on Tuesday after
forecast-beating German sentiment data pointed to an
accelerating recovery in Europe's largest economy and a rise in
merger activity in the United States encouraged buyers on Wall
Gains in Europe were being held in check by the approach of
euro zone flash Purchasing Managers Index reports on Thursday
and a German business sentiment survey on Friday that could show
whether the region's recovery is taking hold.
The FTSEurofirst 300 index index of top European
shares was down 0.1 percent, though this followed a 1.1 percent
rise on Tuesday - its best day for three weeks. Frankfurt's DAX
was up 0.15 percent, while Paris's CAC-40 fell
"I see no reason why we can't consolidate the gains and
possibly move higher," said Michael Hewson, an analyst at CMC
However, some traders have noted that European shares appear
unable to break through their early 2011 levels.
U.S. stock index futures meanwhile pointed to a slightly
firmer open when trading resumes later, with the S&P 500
and Dow Jones contracts 0.1 percent higher.
Data on U.S. new housing starts and building permits for
January are all due at 1330 GMT and are expected to confirm a
continued recovery in that market.
Attention in U.S. markets is likely to be focused on the
minutes from the U.S. Federal Open Market Committee's January
meeting, due at 1900 GMT, which may provide clues on how long
monetary policy in the U.S. is likely to remain ultra loose.
SAFE HAVENS SLIDE
The recent rise in equities was weighing on assets perceived
as safe havens, with German Bund futures down 0.3
percent to 142.24, though news that Spain may be about to issue
a U.S. dollar bond helped support sentiment.
Yields on 10-year Treasuries edged up to around 2.047
percent from 2.03 percent in late U.S. trade.
Gold was also losing ground from a declining safe-haven
appeal, hitting a six month low of $1,597.99 an ounce.
"Fundamentals for gold haven't really changed, but other
asset classes have now become more attractive," said Tobias
Merath, global head of commodity research at Credit Suisse.
In the currency markets the yen resumed its climb against
the dollar after Japanese Prime Minister Shinzo Abe said the
need to establish a special fund to buy foreign bonds had
His comments came a day after Japan's finance minister also
played down talk of such a scheme, which would have helped drive
down the value of the yen.
The dollar fell as low as 93.12 yen after Abe's
remarks before settling to be down 0.2 percent at 93.35 yen,
moving away from a near three-year high of 94.46 hit on Feb. 11.
Strategists said Japan was stepping back from some of its
more aggressive policy-easing proposals after the Group of 20
nations declared at a meeting in Moscow on Saturday that there
would be no global currency war.
In the commodity markets copper and oil prices were mostly
steady after big moves on Tuesday.
Brent crude was up 2 cents at $117.54 a barrel,
having posted the first gain in four sessions on Tuesday.
U.S. crude added 21 cents to $96.87.
Three-month copper futures on the London Metal Exchange
(LME) were at $8,045 tonne, rebounding from three week
lows hit in the previous session.