Poor U.S. growth data eases fears of early end to Fed stimulus

Thu Jun 27, 2013 9:05am EDT
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By Marc Jones

LONDON (Reuters) - World shares and bonds steadied on Thursday while gold and the euro recovered slightly after disappointing data buoyed hopes the U.S. Federal Reserve may leave its stimulus program in place a bit longer previously expected.

The market tone improved overnight after a surprisingly sharp downward revision to first-quarter U.S. economic growth. While hardly bullish, this calmed immediate fears the Fed would soon wind down the huge bond-buying scheme that has underpinned investors' risk appetite.

Another deluge of U.S. data is due throughout Thursday and brighter-than-forecast jobless claims and consumer spending figures released ahead of what was expected to be a third day of gains on Wall Street left focus on the Fed's stimulus plans.

European shares .FTEU3 had seen their first session of relative quiet in a week, as they consolidated the 3.2 percent recovery they have enjoyed over the last two days having dropped 11 percent last week.

London's FTSE 100 .FTSE outshone broadly flat markets in Paris .FCHI and Frankfurt .GDAXI with a 0.3 percent rise adding to earlier gains in Asia to nudge MSCI's world share index .MIWD00000PUS to its highest level in a week.

"Whenever there is good news out of the U.S. it will cause selling because people see it as a confirmation for Fed tapering (off bond-buying), while if we have something more disappointing like yesterday people will say, 'Well OK, it won't happen yet'," said Tobias Blattner, an economist at Daiwa Securities.

"That, unfortunately, is the kind of volatility that is going to continue for the next couple of months."

YIELDS YIELD   Continued...

Electronic information boards display market information at the London Stock Exchange in the City of London January 2, 2013. REUTERS/Paul Hackett