* Europe higher, follows on from Asia, U.S. gains
* Core bonds little changed, U.S. dollar up
* Inflation data due out from UK, U.S.
* Investors await Fed summit later this week
By Lionel Laurent
LONDON, Aug 19 Global stocks rose and core bonds
barely moved on renewed investor appetite for risk on Tuesday,
driven by a lack of escalation of the Ukraine crisis and upbeat
U.S. housing data that buoyed Asian and European markets.
"The situation in Ukraine is still very tense, but slowly
investors are getting used to it and turning their focus back on
the macro and micro data, and earnings have been quite good,"
said Arnaud Scarpaci, fund manager at Montaigne Capital
Equities are still trading broadly near multi-year highs
despite the past month's jitters over geopolitical risk, with
investors keeping a close eye on economic data and
central-banker comments for indications of interest-rate moves
after years of crisis-era rock-bottom benchmark borrowing rates.
Closely watched inflation data for July from the UK and U.S.
were due later on Tuesday.
The MSCI World Index, which tracks stocks
from developed economies, was up 0.17 percent at 1,730.33 points
at 0837 GMT, compared with its all-time high of 1,765.77 points
reached in July.
The FTSEurofirst 300 index of top European shares
was up 0.43 percent, led by gains in Germany, where the
blue-chip DAX index was up 1.0 percent. The index, which is
traded as a proxy for the Ukraine crisis given Germany's strong
trade ties with Russia, is down some 7 percent from its June
Ukrainian government forces have been fighting separatists
for four months in the Russian-speaking east of Ukraine. A
reported attack on a Russian convoy on Friday had sparked fears
of Russian retaliation but the Kiev military has since reported
new successes after raising the national flag in Luhansk,
previously a stronghold of the rebels.
European trading followed on from gains in Asia and Wall
Street, where U.S. equities rose to their highest level since
late July and the U.S. dollar index edged back toward an
11-month high after upbeat housing data.
Emerging markets also benefited, with the MSCI Emerging
Market index up 0.5 percent.
German 10-year bund yields were unchanged at
1.01 percent, just above record lows hit at the end of last
week, while yields on lower rated bonds dipped.
Spanish and Italian equivalents dipped 2 basis points to
2.33 and 2.62 percent, respectively, while Portugal's dropped 4
bps to 3.47 percent. Greek equivalents were unchanged at 5.92
Later in the week, investors will be keeping a close eye on
Wednesday's release of minutes from the Federal Reserve's July
policy meeting as well as comments from the Fed's summit in
Jackson Hole, Wyoming, which starts on Thursday.
A rally in July spurred hopes the dollar was ready for a
push higher, long predicted by many of the biggest investment
houses, but on which it has consistently failed to deliver over
the past year. That casts the steadying of the euro and other
currencies so far this month as just a hiccup, but opinion in
the market is divided.
"We're back in this zone really where it could go either
way," said a dealer with one London bank. "The data over the
next couple of days, and (Fed Chair Janet) Yellen's appearance,
could be the key to breaking us out of this range, but we have
been here before. This year's model is range-trading."
U.S. crude oil and Brent crude futures were
slightly higher, respectively up 0.4 percent and 0.1 percent.
(Reporting by Lionel Laurent; Additional reporting by Blaise
Robinson, Anirban Nag, John Geddie, Chris Vellacott and Patrick
Graham; Editing by Mark Trevelyan)