Stocks head for best week in 8 months, dollar bounces
By Marc Jones
LONDON (Reuters) - World shares headed for their best week in eight months on Friday in the wake of reassuring comments from the Federal Reserve on its stimulus program, while the dollar bounced as focus switched to U.S. earnings and China's economy.
Wall Street was expected to see a tentative start to the day after its record high finish on Thursday, with investors starting to digest a clutch of earnings reports from top U.S. banks including JP Morgan (JPM.N: Quote) and Wells Fargo (WFC.N: Quote). .N
European shares rose steadily through the day as investors shrugged off some caution in Asia after China's finance minister doused hopes of fresh stimulus, saying growth of below 7 percent was acceptable for Beijing.
The broad FTSEurofirst 300 .FTEU3 was up 0.5 percent ahead of the U.S. open and was more than 3 percent higher on the week, while MSCI's world index .MIWO00000PUS looked on course for its best week since November.
This week's rally in financial markets has spread across stocks and bonds to oil and metals and been driven by hints from the U.S. Federal Reserve that it may not be as eager to phase out its support as markets had started to believe.
"It is a win-win situation (for investors). If the economic data does start to pick up, it will be a gradual tapering of QE and if it does not, then they will keep the liquidity tap on," said Chris Bates, analyst at Smith and Williamson.
After a week of swings in the world's big currencies, foreign exchange markets were trading in a calmer fashion, though positioning had started ahead of Chinese growth data due on Monday. <FRX/>ECONG7
The dollar index .DXY, which plots the greenback's performance against a basket of major currencies, bounced off 2 1/2 week lows, having slumped more than 2 percent since Fed Chairman Ben Bernanke assured it would remain in support mode. Continued...