Global shares, dollar up as investors bet on strong data

Tue Aug 13, 2013 8:06am EDT
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By Marc Jones

LONDON (Reuters) - Evidence that Europe's economy is finally picking up steam lifted the region's shares to a 2-1/2 month high on Tuesday as expectations for strong U.S. data put the dollar on course for its first three-day rally since June.

Many economists expect U.S. retail figures due at 0830 ET to come in strong and add to the case for a sooner-rather-than-later cut in Federal Reserve stimulus, a debate that has dominated financial markets for months.

Wall Street, which has fallen in five of the last six sessions, was expected to open 0.2-0.4 percent higher after a positive day for both European and Asian stock markets.

In Europe, a jump in Germany's ZEW economic sentiment survey dovetailed with a rise in euro zone industrial output and the fastest rise in UK house prices in seven years, bolstering a renewed sense of optimism in the region.

London's FTSE .FTSE, Germany's DAX .GDAXI and Paris's CAC 40 .FCHI climbed 0.5 percent, 0.8 percent and 0.3 percent respectively to push the broad FTSEurofirst 300 .FTEU3 index to its highest level since mid-May before gains were trimmed.

Debt markets also reflected that shift. Yields of safe-haven German 10-year government bonds hit their highest in over a month and a half while risk premiums on Italian and Spanish bonds continued to ease.

"It is not only Germany that is moving in the right direction," said Deutsche Bank economist Mark Wall.

"There is a general improvement taking place in Europe and in the context of this being a debt crisis one shouldn't underestimate the importance of getting back to a position of growth... The 64,000 dollar question is whether this is sustainable."   Continued...

Workers speak above an electronic information board at the London Stock Exchange in the City of London January 2, 2013. REUTERS/Paul Hackett