* European shares hovering at 2-1/2 month highs
* Upbeat data helps Chinese, Asian shares ex-Japan advance
* Gold rises to highest in almost two-weeks
* Dollar edges up but remains near seven-week low
By Marc Jones
LONDON, Aug 12 European stocks rose to 2-1/2
month highs on Monday on signs that China's slowdown has run its
course and expectations that data this week will point to the
euro zone pulling out of its longest recession on record.
Britain's FTSE 100, Germany's DAX and
Paris's CAC 40 all opened the week up 0.1 percent to
leave the regional FTSEurofirst 300 hovering at its
highest level since the end of May.
Bond markets were quiet, with Spanish and Italian debt
making a little ground, while for currency investors the euro
and yen eased against the dollar , which continued
to edge away from last week's seven-week low.
Supporting markets, jittery about the prospect of the U.S.
Federal Reserve phasing out its support programme, was
reassuring data from China and expectations that this week's
euro zone GDP and sentiment figures will further support hopes
the bloc is recovering.
"What we saw last week was that the figures from China lent
some support to the feeling in the market that the slowdown (in
China) is over," said Rabobank economist Elwin de Groot.
"I am a little bit careful though, these are still early
days ... but once Asia begins to re-accelerate then that is good
In Asian trading, China's CSI300 share index
climbed 2.1 percent, extending last Friday's rise after factory
output grew in July at its fastest pace since the start of the
Data released after the market close on Friday was equally
positive, showing Chinese new bank loans and money supply for
July came in higher than expected despite a fall in a broad
measure of liquidity.
JAPAN'S GROWTH SLOWS
Japan' Nikkei share average shed 0.7 percent,
however, hitting its lowest since June 28, after data showed its
economy grew at a slower-than-expected pace in April-June,
triggering investors to cut their risk exposure.
But the yen reversed early gains to trade down 0.6
percent at 96.80 yen to the dollar. Earlier, it had strengthened
as much as 0.4 percent to 95.92 yen to the dollar, not far from
a seven-week peak of 95.810 yen touched last week, and hit a
six-week high at 127.97 yen to the euro.
Japan, the world's third-largest economy, grew an annualised
2.6 percent in the second quarter, a third straight quarter of
expansion but slower than a downwardly revised 3.8 percent rate
in the first quarter.
The median forecast was for annualised growth of 3.6
percent, and so the data may heighten calls to delay a planned
sales tax increase.
Yields on benchmark 10-year Japanese government bonds
, which move opposite to prices, edged down 0.5
basis point to a three-month low of 0.745 percent.
U.S. stocks were expected to open down 0.1-0.3 percent later
. Last week they posted their biggest weekly decline
since June as comments from Fed policymakers sparked renewed
talk of an early cut in its stimulus.
In commodities markets, copper prices slipped 0.3
percent to around $7,250 a tonne after climbing 1.3 percent to a
two-month high on Friday after the upbeat Chinese factory data.
They rose 3.9 percent last week to log their best weekly
gain in almost a year.
Brent crude prices dipped 0.4 percent to slip below
$108 a barrel after they advanced 1.4 percent on Friday to snap
a five-day run of loss - the longest since April.
Meanwhile, gold rose 1.3 percent leaving it heading
for a fourth straight day of gains. It came as holdings in the
world's biggest gold exchange-traded fund rose for the first
time in two months.
"The inflows into SPDR are good news," said a trader in Hong
Kong. "The fund tends to have an impact on prices because of its
size. But I don't think (inflows) will persist as fundamentals
for gold are still negative."