* World shares at near 5-yr high
* Dollar slips from Friday's 4-1/2 year high vs yen
* Gold extends longest losing streak in four years
By Marc Jones
LONDON, May 20 Optimism about global growth
pushed world shares to a near five-year high on Monday, while
debate about the future of the U.S. Federal Reserve's stimulus
programme extended gold's longest losing streak in four years.
Data last week that showed U.S. consumer sentiment at its
strongest in nearly six years continued to support equity
markets ahead of this week's forward-looking PMI numbers from
most of the world's top economies.
Futures prices pointed to a steady start for a Wall Street
at record highs after earlier minor gains on European and
Asian indexes lifted MSCI's world shares index
0.3 percent to its highest since June 2008.
A constant drip of central bank stimulus and pledges of
support over that have driven a 40 percent surge in global
stocks and squeezed core bond yields over the last year.
But with signs that growth in key economies is slowly
improving, investors are starting to wonder what lies ahead.
The near 20 percent slump in yen since the start of
the year has been the most recent example of the impact of such
stimulus programmes, thanks to the Bank of Japan's $1.4 trillion
plan to boost growth through inflation.
It was off Friday's 4-1/2-year low, however, at 102.5 yen to
the dollar by 1230 GMT after Japan's economy minister suggested
over the weekend the currency might have weakened enough.
"People say the excessively strong yen has corrected quite a
bit. If the yen continues to weaken steadily from here, negative
effects on people's lives will emerge," Akira Amari told a
Sunday talk show.
Toyko also upgraded its economic forecasts on Monday, as
emerging signs of an upturn in exports and factory output added
to growing evidence that Prime Minister Shinzo Abe's aggressive
polices are beginning to reignite growth.
The dollar has also been driven up in recent weeks by
signs that some at the U.S. Federal Reserve are thinking about
scaling down its $85 billion a month bond buying programme.
The Fed will break up this week's barrage of PMI data on
Wednesday when it publishes the minutes of its recent meeting
and its chairman Ben Bernanke speaks in front of Congress.
Following the recent policymaker comments, investors - who
have become used to successive rounds of stimulus in recent
years - will be watching closely.
"All eyes should be on central banks when judging risk
appetite and its impact on FX markets," Morgan Stanley's FX
strategy team wrote in a note.
"The U.S. economy has developed pockets of strength, leaving
the market with the impression that the Fed might be the first
major central bank to pull liquidity away from markets."
That worry saw gold - often seen as a hedge against
the kind of inflation central bank intervention can bring about
- extended its longest losing streak in four years to hit a
1-month low of $1,338.95 an ounce. Silver and platinum
"We have started to see a series of positive readings coming
out of the United States. We are positioned for a rising market
and think that the best way is to invest in financials," said
HSBC equity strategist Robert Parkes.
With risk appetite dominating markets, safe-haven German
Bunds fell 40 ticks while demand for higher-yielding
euro zone periphery bonds continued to improve.
The European Union's top economic official added to the
pressure on yields as he said low inflation meant the European
Central Bank had room to cut rates again.
Brent crude was down 0.4 percent on the day at
$104.30 a barrel while copper had eased 0.7 percent to
$7,282.50 a tonne as the talk of the Fed tapering its bond
purchases, but mainly the stronger dollar, took its toll.
A strong dollar tends to depress oil and other commodities
that are priced in the U.S. currency on international markets.
The fundamental outlook for oil also looks less positive
with a weaker demand growth for 2013 as well as higher supply,
according to the West's energy watchdog, the International
"The strength of the dollar has been negative for
commodities," said Olivier Jakob, analysts at Swiss energy
"But short-term the market looks fairly balanced, with Brent
trading in a range between $90 and $110 per barrel. It is
difficult to see it breaking out of that for a while."
(Reporting by Marc Jones; Editing by Toby Chopra)