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GLOBAL MARKETS-Shares, euro gain as markets eye Wall St reopen

Richard Hubbard
Wednesday, 31 Oct 2012 | 11:56 AM ET

* European shares up 0.2 pct, set for 5th monthly rise

* Euro holds within recent ranges ahead of U.S. jobs data

* Oil above $109 a barrel as U.S. east coast refineries return

LONDON, Oct 31 (Reuters) - World shares and the euro edged up on Wednesday as investors braced for a storm-hit Wall Street to reopen after its two-day closure and looked ahead to economic data later in the week.

On the last trading day of the month, the reopening of U.S. stock and bond markets after a lockdown during super storm Sandy is likely to produce choppy trading conditions, although stock index futures point to a strong start.

``The market is waiting to see how the U.S. market opens after Sandy. Equity futures are higher, so people are expecting a positive opening,'' said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen.

The December S&P 500 index futures contract traded on the Chicago Mercantile Exchange's Globex electronic trading platform was up 0.6 percent.

Investors were also standing back from the markets ahead of some major data releases, including October surveys of manufacturing activity in China and the United States on Thursday and the monthly U.S. jobs report on Friday.

Caution has also increased over the tight U.S. presidential election race as Tuesday's vote nears, with traders trying to assess its implications for resolving the fiscal problems facing Washington which could stall the current economic recovery.

``Until we get to the other side of the election, the other side of payrolls and the other side of this mess in New York, the market is going to think twice about taking risk of any significant size,'' said Ned Rumpeltin, head of G10 FX strategy at Standard Chartered Bank.

The euro rose 0.4 percent against the dollar to $1.3014, its strongest in nearly a week, though still within the $1.28 to $1.32 range seen since mid-September.

The MSCI world equity index was up 0.3 percent at 330 points; it remains on track for its first monthly loss since May but has gained over 10 percent so far this year.

EURO OUTLOOK CLOUDED

The outlook for the European single currency remains clouded by uncertainty over when Spain may apply for a bailout - a move which would allow the European Central Bank to buy its bonds - and over whether Greece will agree to more austerity and reforms. But the euro gained some support on Wednesday from some improving economic data across the region.

Euro zone inflation eased as expected in October thanks to slower growth in energy prices, while German retail sales rose in September at their fastest pace since June 2011, reinforcing a view that private consumption will remain a pillar of support for the economy.

Consumer spending in France also inched up 0.1 percent in September, rebounding from a 0.8 percent fall in August, though most analysts had expected better.

But unemployment is still an unfolding disaster in the euro zone, with 146,000 more people joining the ranks of the jobless which have swelled to 18.49 million or 11.6 percent of the workforce of the 17-nation currency bloc.

``The euro-zone unemployment rate looks set to rise further, placing more pressure on struggling households,'' said Ben May, European economist at Capital Economics.

European stocks did manage to add to their solid gains for the month thanks to some good earnings reports, though uncertainty over the reaction on Wall Street to the economic impact of Sandy was also keeping many investors sidelined.

The FTSE Eurofirst index of top European shares was up 0.2 percent at 1,107 points, bringing its gains for the year to date to over 10.5 percent after five straight monthly rises.

Germany's DAX index gained 0.7 percent due in part to strong profits by airline Lufthansa, but London's FTSE 100 fell following an 18-percent share price drop for oil and gas firm BG Group after it said it did not expect its production to grow at all next year.

COMMODITIES STEADY

In the oil market, the after-effects of Sandy on the U.S. east coast were still being assessed, with reduced fuel demand expected and roads and airports remaining shut, even as refineries in the region slowly resumed operations.

``We may have a rapid return of supply, but the demand will be slower to recover,'' said Tony Nunan, a risk manager at Mitsubishi Corp.

Brent crude for December delivery was up 60 cents at $109.68, while U.S. crude for December rose 76 cents to $86.43, still on track for the biggest monthly loss since May.

Trading of oil, natural gas and other commodity futures and options run by the CME Group at the NYMEX world headquarters in New York is set to resume on Wednesday. But the U.S. Energy Department has delayed its weekly petroleum inventory report by a day to Thursday.

Meanwhile gold had inched up 0.1 percent to $1,711.01 an ounce, but it, too, is on course for its biggest one-month decline since May, with a monthly drop of more than 3 percent.