March 6, 2013 / 9:21 AM / 5 years ago

GLOBAL MARKETS-European stocks hit highest since 2008 crash

* Stimulus hopes help European shares hit 4-1/2 year high
    * MSCI world share index just under June 2008 high
    * Wall Street expected to open up, Dow to hit new all-time
    * Euro dips as traders mull ECB rate cut chances

    By Marc Jones
    LONDON, March 6 (Reuters) - European stock markets rose to
their highest since the 2008 financial crisis on Wednesday,
helped by signs the U.S. economy is improving and expectations
of more pledges of support for growth from major central banks.
     U.S. stock index futures also pointed to fresh gains on
Wall Street, after the previous session's stellar run saw the
Dow Jones Industrial Average hit an all-time high. 
     The European Central Bank, the Bank of England and the Bank
of Japan are all expected to stick to ultra-easy monetary policy
at meetings this week, following on from reassurances by U.S.
Federal Reserve officials that their stimulus programme remains
in place. 
    Analysts even see some scope for fresh action in Europe on
Thursday, giving a 40 percent chance for more bond buying from
the Bank of England and a 10 percent likelihood
of an interest rate cut from the ECB. 
    That, combined with some encouraging U.S. economic data this
week and China's promise of record government spending to help
sustain growth, pushed world and European share
indexes higher on Wednesday.
    "It's panic buying," said Nick Xanders, who heads up
European equity strategy at BTIG. "At this stage everyone wants
to buy it, everyone wants to get involved, and everyone is
scared of underperforming."
    The pan-European ESTOXX 50 was up 0.5 percent
ahead of the start of U.S. trading as Frankfurt's DAX 
jumped 1 percent and London's FTSE 100 and Paris's
CAC-40 added 0.2 percent.
    Those gains, coupled with a rise in Asian shares overnight,
pushed the MSCI world index up 0.3 percent and
just short of a new 4-3/4 year high.
    "Indexes are breaking above big resistance levels, and this
is creating room on the upside," said Lionel Jardin, head of
institutional sales at Assya Capital, in Paris.
    "The sentiment is that central banks are going to remain
very accommodative for a while, and at the same time companies
are in really good shape, with strong cashflows."
    Still, with the ECB's meeting in view and worries over the
euro zone's debt crisis again on the rise due to Italy's
political deadlock, German government bonds recovered some poise
after a sell-off in the previous session.
    The Bund future was flat on day at 145.06 after
dropping by around half a point on Tuesday, while Italian and
Spanish government bonds also saw minor gains.
    Italian centre-left leader Pier Luigi Bersani, whose PD
party won most votes in last week's inconclusive election,
presents his policy plans to his party later. It could be
significant if he produces enough to draw support from populist
leader Beppe Grillo's Five Star Movement.
    After a steady start, the euro was down 0.1 percent
against the dollar at $1.3030 at 1250 GMT as traders waited to
see whether the recent disappointing euro zone data and ongoing
debt worries would be enough to see the ECB surprise consensus
and cut rates on Thursday. 
    As expected, official data confirmed the euro zone ended the
year in its second recession since 2009. Eurostat fleshed out
its numbers, showing Germany as the only major euro zone economy
to grow in the quarter, at a crawl, while France, Spain and
Italy all contracted. 
    "There's reasonable downside to the euro. The situation in
Italy is still uncertain," said Bill Diviney, currency
strategist at Barclays.
    "Although we don't expect any big changes to President
Draghi's stance, he's going to stay fairly dovish, given
uncertainties," he added.
    The dollar, meanwhile, was slightly higher as
investors awaited U.S. jobs and factory orders data to confirm
expectations of a revival in demand growth following recent
upbeat economic data from the U.S. and China. 
    Economists in a Reuters poll expect the ADP employment
figures due at 1315 GMT to show 170,000 jobs were created in
February versus 192,000 new jobs in January. That will also
provide a pointer for "non-farm payrolls" data on Friday. 
    Growth-linked currencies were another beneficiary of the
broader improvement in sentiment. The Aussie dollar 
rose 0.2 percent to $1.0280 as data showing moderate economic
growth helped it extend its recovery from Monday's $1.0116
eight-month low.
    Commodity markets were more mixed, however, following sharp
rises in the previous session.
    Despite the increasingly positive mood, there are still some
areas of concern, namely the Chinese government's move to cool
the country's overheated property market, the possible economic
impact of U.S. spending cuts, and the deadlock in Italy.
    Brent oil fell back towards $111 a barrel following
news of Venezuelan President Hugo Chavez's death, copper traders
took profits after two days of gains, while gold edged up
0.2 percent to $1,575 an ounce.
    "In the next few days, central bank meetings are on the
agenda, and after some economic indicators have surprised to the
downside in February, market participants expect renewed
assurance that monetary policy will remain expansionary for
quite some time," Credit Suisse said in a note.
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