* European shares at 1 month high
* Rise after Alcoa showcases solid start to U.S. earnings
* Greek aid deal supports euro, euro zone debt
* Oil eases as supply boosts outweigh Egypt worries
By Marc Jones
LONDON, July 9 World shares extended gains on
Tuesday and the dollar hovered near a three-year high, spurred
on by a good start to the U.S. earnings season that added extra
gloss to last week's strong jobs data.
Share markets reacted positively after Alcoa, the
largest U.S. aluminium producer, kicked off the country's
reporting season with a larger-than-expected adjusted
Europe's broad FTSEurofirst 300 share index climbed
almost 1 percent to its highest level in a month as a deal to
drip-feed Greece the latest 6.8 billion euro instalment of its
bailout added to the upbeat mood.
Core and peripheral euro zone debt also made solid
gains and the euro moved off the seven-week low it has
been hovering around since the European Central Bank made clear
last week it remains ready to cut interest rates again.
"What I think to has been very positive for the markets is
that the ECB was more dovish than expected last week," said
Rabobank macro strategist Emile Cardon.
In Asia, Japan's Nikkei share average finished up
almost 2.6 percent, near a six-week high, as the bright U.S.
data helped the yen slip back below 101 yen to the dollar
The dollar index that measures it versus six major
currencies was back on the front foot at 84.236 by mid-morning,
near Monday's three-year high of 84.588.
With more U.S. earnings due later, stock futures
pointed to Wall Street opening up around 0.5
percent. In a note over the weekend Goldman Sachs said rising
earnings, coupled with stable margins, should lift the S&P 500
by 8 percent to the investment bank's year-end target of 1,750.
The index ended at 1,640.46 on Monday.
The late evening Greek aid deal in Brussels helped nudge the
euro up to $1.2886. But it was slipping back again by
0945 GMT, and with the Fed and the ECB appearing to be facing in
opposite policy directions analysts saw more dollar strength.
"In the medium term I see the dollar broadly stronger," said
Vasileios Gkionakis, Global Head of FX Strategy at UniCredit in
"Firstly on the back of the two dovish central bank
announcements (from the ECB and Bank of England) we saw in
Europe last week plus the fact data in the U.S. is getting
better and better."
Ian Stannard, head of European FX strategy at Morgan
Stanley, said any hints on Wednesday in the minutes from the
Federal Reserve's June meeting that U.S. monetary stimulus could
be tapered soon would also support the dollar.
Expectations that a stronger U.S. economy will give the Fed
room to begin scaling back its bond-buying, most likely in
September, have sparked a near 5 percent rally in the dollar and
some 50-basis point rise in the benchmark 10-year U.S. bond
yield since mid-June.
The yield on U.S. 10-year notes had risen as high as 2.755
percent on Monday, though bargain-hunting pushed it back to
2.656 percent ahead of the U.S. restart on Tuesday.
Back in Europe, sterling fell to a near four-month
low against the euro while gilts rallied after data showed
British manufacturing output unexpectedly contracted in May
while the trade deficit widened.
Oil futures dipped, slipping from Monday's
multi-month highs as news that a major Libyan oilfield and an
Iraqi pipeline were returning to service eased concerns about
global oil supplies sparked by unrest in Egypt.
Gold extended a rebound to a second day after breaking
through a key technical level and as Chinese inflation data
boosted its appeal as a hedge against rising prices in the
world's second-biggest buyer of the metal.
Spot gold rose 1.7 percent to $1,250 an ounce by 0935