Global shares rise as hopes of policy easing grow

Tue Jul 3, 2012 8:04am EDT
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By Richard Hubbard

LONDON (Reuters) - Global shares rose on Tuesday as expectations rose that major central banks will take more action to support the world economy, after factory data highlighted the drag on growth from the euro zone debt crisis.

With European and Asian shares higher, U.S. stocks were also poised to extend their recent gains, and oil hit $100 a barrel for the first time in three weeks as tension over Iran added to the talk of policy easing.

However, the euro steadied near $1.26 to the dollar due to growing doubts about a new European plan to support indebted countries, and on the likelihood of a rate cut by the European Central Bank at its meeting on July 5.

"If the ECB offers loud support this Thursday with a rate cut and a signal of more to follow in the face of lower growth and inflation, there may be enough fuel for a summer rally in stock markets," said Bill O'Neill, EMEA Chief Investment Officer for Merrill Lynch Wealth Management.

The stimulus hopes drove the FTSE Eurofirst 300 index .FTEU3 of top European companies up 0.5 percent to 1040.50 points, adding to a 4.2 percent jump since Friday.

The euro zone's blue chip Euro STOXX 50 .STOXX50E index has jumped 6.2 percent in the two last sessions after euro zone leaders surprised investors with the extent of the progress made at their recent summit in tackling the protracted debt crisis.

After gains on Wall Street on Monday and earlier across Asia, MSCI's world equity index .MIWD00000PUS was up 0.35 percent at 314.3.48 for a gain of 3.7 percent since Friday.

Britain's top share index, the FTSE 100 index .FTSE, was another gainer ahead of the Bank of England's policy setting meeting, also on Thursday, when it is expected to provide further economic stimulus measures to boost a flagging economy.   Continued...

Traders work at their desks at the Frankfurt stock exchange July 2, 2012. REUTERS/Alex Domanski