2:28 AM
Economic recovery drives world stocks higher
Addison Ray
By Jeremy Gaunt, European Investment Correspondent
LONDON | Wed Feb 2, 2011 4:45am EST
LONDON (Reuters) - World stocks punched fresh 29-month highs on Wednesday, lifted by strong data pointing to sustained global economic recovery, continuing positive corporate earnings and easing concerns about Egypt.
Oil prices, however, continued to climb on worries that unrest in Egypt would trigger regime change across the Middle East and North Africa, driving North Sea Brent crude futures toward a 28-month high.
The dollar fell to three-month lows against a basket of major currencies as the three factors took the steam out of safe-haven buying in the greenback.
MSCI's all-country world stock index, one of the broadest gauges of global equities, was up 0.5 percent having hit levels last seen in August 2008.
Its developed market counterpart gained 0.5 percent to come close to a high last seen in early September 2008.
Emerging markets were up 0.8 percent on the day, but remain down more than 1 percent for the year, reflecting a recent shift by investors from emerging to developed markets.
Stock investors were cheered on Tuesday by strong factory data worldwide, which pushed U.S. benchmark stock indexes to their highest closing levels since June 2008.
Strong earnings from delivery firm UPS Inc and drugmaker Pfizer added to the mood.
"The world economy appears to be improving a little faster than expected, valuations are ok and companies are publishing quite good results," Geert Ruysschaert, strategist at BNP Paribas Fortis Private Banking, said. "So investors can take advantage of that."
The pan-European FTSEurofirst 300 was up 0.4 percent for a near 4 percent year-to-date gain. Earlier, Japan's benchmark Nikkei ended up 1.8 percent for its biggest daily gain since December 2.
Concerns about the political crisis in Egypt, meanwhile, were easing on financial markets after President Hosni Mubarak said he will step down at the end of his term in September, even though protestors continue to demand an immediate end to his 30-year rule.
Foreign investors have begun to show renewed interest in Egyptian bonds and stocks and the cost of insuring Egyptian debt against default fell.
DOLLAR AT LOWS
The dollar was at 12-week lows with expectations of loose U.S. monetary policy further encouraging risk-taking and as concerns over euro zone peripheral debt seemed to be contained.
"The dollar is weak due to the huge U.S. deficit, no yield and a very dovish central bank," said Ray Farris, currency strategist at Credit Suisse.
Posts
