Solid growth lifts shares, dollar, China disappoints

Mon Jun 10, 2013 7:59am EDT
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By Richard Hubbard

LONDON (Reuters) - The dollar bounced higher against the yen and Japanese stocks led a rise in world shares on Monday as signs of economic momentum in the United States and Japan outweighed worries about a slowdown in China.

A central bank forecast that France's economy will grow slightly in the second quarter and a rise in French factory output helped underline the sense of recovery, as did better euro zone investor sentiment for June. ECONEZ

"The story is one of slow but steady growth, moving in the right direction but with headwinds still visible for the United States, euro area and China," said Sarah Hewin, senior economist at Standard Chartered Bank.

The improving outlook for major developed economies lifted MSCI's world equity index .MIWD00000PUS by 0.25 percent, its third straight day of gains, with U.S. stock futures pointing to further rises when Wall St opens. .N

But investors are ultra-sensitive to the timing of any slowdown in the Federal Reserve's huge bond-buying program and markets are expected to remain volatile as each new data report is closely scrutinized for hints of when it may begin.

Last Friday's monthly jobs report, seen as the main gauge of future Fed action, offered little in the way of new clues, and the spotlight has shifted to this week's retail sales and factory activity numbers and next week's Fed policy meeting.

"(The jobs data) hasn't changed the market's view much on the timing of Fed tapering," said Kasper Kirkegaard, currency strategist at Danske Bank.

The solid growth implied by the 175,000 new jobs created in May in the face of ongoing government cutbacks has helped the dollar recover some of its recent losses.   Continued...

A man speaks during a seminar about stock investment at Tokyo Stock Exchange June 10, 2013. REUTERS/Yuya Shino