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GLOBAL MARKETS-Shares resume upward trend on China data; dollar pressured by Fed

Angela Moon
Thursday, 24 Oct 2013 | 5:15 PM ET

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* China's factories expand at best pace in seven months

* Euro gains as bearish dollar sentiment persists

* U.S. bond yields bounce off 3-month lows as rally pauses

* Wall St gains as Fed hopes offset mixed earnings

NEW YORK, Oct 24 (Reuters) - Global equity markets resumed their recent upward trend on Thursday, boosted by signs of growth in China's manufacturing sector, while the dollar fell to a two-year low on expectations for a steady accommodative monetary policy from the Federal Reserve.

The S&P 500 index ended higher, locking in the benchmark's 10th session of gains in the past 12 as investors shrugged off a mixed batch of earnings and economic data.

"You've got this underlying liquidity surge that's propping prices up, and earnings season hasn't been poor," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

The dollar was pressured, hitting a nine-month low against a basket of currencies on growing expectations the Fed will not shrink its bond-purchase program until next year. The greenback was last down 0.1 percent against a basket of currencies.

The euro shrugged off disappointing data showing the pace of growth in euro zone business eased this month. Talk of heavy buying by central banks in Asia also boosted the currency.

The euro rose 0.2 percent to $1.3803, having hit as high as $1.3825, according to Reuters data, its strongest since November 2011.

Data showing growth in China's vast factory sector reached a seven-month high this month also fed investors' appetite for risky assets and eased concerns about a slowdown in Chinese exports, which would point to weakening global demand.

But U.S. manufacturing output fell for the first time in four years while the euro zone economy lost momentum, surveys showed, suggesting the world economy is still facing speed bumps as China tries to rebound from a slowdown and as growth in advanced economies remains fragile.

In a heavy day of U.S. earnings reports, 47 S&P 500 components including Microsoft Corp and Amazon.com Inc reported results on Thursday.

Third-quarter earnings overall have brought disappointments, including some weak outlooks. Just 53 percent of companies so far have beat analysts' revenue expectations, below the long-term average, according to Thomson Reuters data.

U.S. Treasuries yields edged up from three-month lows as buying on views the Federal Reserve will not shrink its bond-purchase program until next year faded.

Benchmark 10-year Treasuries traded down 8/32 in price to yield 2.514 percent, up 3 basis points from late on Wednesday. The 10-year yield fell to a three-month low of 2.471 percent on Wednesday.

Fed policy is seen as very data-dependent, though economic indicators over the coming months are likely to be skewed by the effects of the government shutdown. That could limit insight on the state of the U.S. economy and to what degree the shutdown and the fight over raising the debt ceiling harmed growth.

On Wall Street, the Dow Jones industrial average ended up 95.88 points, or 0.62 percent, at 15,509.21. The Standard & Poor's 500 Index was up 5.69 points, or 0.33 percent, at 1,752.07. The Nasdaq Composite Index was up 21.89 points, or 0.56 percent, at 3,928.96.

European shares recovered their poise, climbing back toward five-year highs on strong corporate results and the encouraging manufacturing data from top metals consumer China.

The pan-European FTSEurofirst 300 index rose 0.5 percent to 1,285.89, recovering from the previous session's fall and climbing back toward Tuesday's five-year highs of 1,291.93.

MSCI's world equity index added 0.3 percent, partially retracing losses of 0.6 percent on Wednesday, when markets were rocked by fears that a spike in Chinese short-term rates could hurt growth.

In commodities trading, spot gold rose 1.4 percent to $1,350.06 an ounce, having earlier hit $1,351.61, its highest since Sept. 20.

The U.S. crude oil benchmark snapped three sessions of losses and ended the day 25 cents higher at $97.11 a barrel, after touching a four-month low of $95.95. Brent crude oil ended 81 cents lower to $106.99 a barrel, a fresh two-month settlement low.