* 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. seen steady as Fed minutes eyed
By Richard Hubbard
LONDON, Feb 20 Signs of an improving global
economic recovery lifted world shares to 4-1/2-year highs on
Wednesday, while investors waited to see if Federal Reserve
minutes would hint at any changes to its support of the U.S.
The minutes from the Fed's most recent meeting, due for
publication later, will come alongside key U.S. housing and
inflation data and give investors the latest temperature reading
on the world's largest economy.
Global equity markets have surged over the last seven months
as major central banks have repeatedly delivered support.
After European shares jumped on Tuesday on forecast-beating
German sentiment data, it was the turn of the MSCI world share
index on Wednesday, which hit its highest level
since June 2008.
"The MSCI world and the S&P 500 are the ones driving up
here, although there is nothing really new driving this move
other than the general favourable backdrop of economic data and
reduced tail risks," said National Australia Bank market
strategist Gavin Friend.
Details from the last Bank of England meeting showed its
policymakers were more inclined than had been thought for more
asset purchases under its quantitative easing (QE) programme and
had even considered cutting interest rates.
The pound, which has been on a rapid slide in recent weeks,
slumped to an 8-1/2-month low against the dollar of $1.5336
<GBP=D4 >, while the euro climbed to a near 16-month high of
"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.
Britain's main FTSE 100 stock index jumped 0.4
percent to 6,402.43 points, a fresh five-year high and above the
6.400 psychological level that some traders said could encourage
further 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 a 4-1/2 year high of 359.37 percent before dropping
back slightly to 358.38 ahead of the open on Wall Street.
ITALY ELECTION JITTERS
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.
Italian elections at the weekend are also creating market
uncertainty. Rating firm S&P warned there could be "a loss of
momentum on important structural reforms" after the Feb. 25
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
U.S. stock index futures meanwhile pointed to a steady open
when trading resumes later, with the S&P 500 and Dow
Jones contracts almost flat.
Data on U.S. new housing starts and building permits
confirmed a continued recovery in that market as new permits for
construction rose to a 4 1/2-year high.
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 142.32, though news that Spain may be about to issue
a U.S. dollar bond helped support sentiment.
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
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.
Abe's 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 swinging back into positive territory at 93.62
yen, still some distance from the near three-year high of 94.46
it hit on Feb. 11.
In the commodity markets copper and oil prices were mostly
softer after big moves in the previous session.
Having posted the first gain in four days on Tuesday, Brent
crude dipped back below $117 a barrel as the prospect of
more supply from Saudi Arabia offset optimism about an improving
global economy bolstering demand.
Copper prices slipped to a near four-week low of $8,019 a
tonne, dragged lower by demand concerns from top
consumer China and the recent fall of the euro.