Global shares edge up as U.S. jobs data seen flagging recovery

Fri Aug 2, 2013 7:20am EDT
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By Richard Hubbard

LONDON (Reuters) - Major government bond yields and world shares both edged higher on Friday as expectations hardened that the U.S. payrolls report will signal stronger growth and an early cutback in the Federal Reserve's stimulus efforts.

The improving economic outlook and rising yields added strength to the dollar and saw Brent oil pass $110 a barrel but put gold on course for its biggest weekly loss in a month.

"The combination of rising bond yields and rising equity markets reflects the view that the Fed is going to start tapering but that this is because the economy is reaching exit velocity," Nick Kounis, head of macro research at ABN-AMRO, said

Italian bonds meanwhile braved growing political uncertainty after Italy's top court upheld a jail sentence against former premier Silvio Berlusconi that could throw the country's coalition into crisis.

Italian government bond yields were down 3 basis points at 4.34 percent.

The main market focus was on July's U.S. payrolls report, which is expected to reflect recent data on factory activity and private sector hiring that have pointed to growing economic momentum in the world's largest economy.

But coming just after Fed Chairman Ben Bernanke tried to ease concerns that any imminent tapering of its money-printing stimulus does not mean rate hikes, a strong number could reignite some market volatility.

The prospect of an end to stimulus - which has pumped billions of dollars into world markets - has already battered some assets, notably in emerging markets.   Continued...

A trader works on the floor of the New York Stock Exchange, July 29, 2013. REUTERS/Shannon Stapleton