Global shares up on ECB rate hopes, China data; euro flat

Fri Feb 8, 2013 8:18am EST
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By Marc Jones and Richard Hubbard

LONDON (Reuters) - World shares rose and the euro hovered near a two-week low on Friday, on course for its biggest weekly loss in seven months after the European Central Bank rekindled speculation about another cut in interest rates.

Strong Chinese trade data help lift optimism about global growth prospects, boosting oil, copper and shares, although U.S. stocks were poised for a mixed start with the key S&P 500 index expected to record its first weekly drop of the year. .N.

The ECB left rates at a record low 0.75 percent on Thursday but the bank's President Mario Draghi levered the door to a cut back open by indicating it would monitor whether the euro's rise over recent months could push inflation below its comfort zone.

European shares were enjoying their best day of the month on the better Chinese data and hopes lower rates -- or at least the threat of them -- would reverse some of the 8 percent rise in the trade-weighted value of the euro since August.

"The ECB had quite an impact on the euro-dollar and the positive Chinese data we have had has helped shares," said ABN Amro economist Aline Schuiling.

"Draghi signaled quite clearly yesterday that with the rise in the euro, the risks to price stability are to the downside. We expect the dollar to continue to strengthen, but if that reverses then markets would price in a rate cut."

London's FTSE 100 .FTSE, Paris's CAC-40 .FCHI and Frankfurt's DAX .GDAXI were up 0.4, 0.45 and 0.2 percent respectively by 1230 GMT pushing the pan-European FTSEurofirst 300 .FTEU3 up 0.6 percent, though it was still on course for its second consecutive weekly fall.

Draghi said the euro's recent surge was a sign of a return of confidence, but cautioned: "We certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned."   Continued...

Visitors cast their shadows on the logo of the Tokyo Stock Exchange, prior to a ceremony marking the end of trading in 2012 at the Tokyo Stock Exchange in Tokyo December 28, 2012. REUTERS/Kim Kyung-Hoon