Global equities up, China stimulus eyed; dollar gains

Wed Mar 26, 2014 11:56am EDT
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By Barani Krishnan

NEW YORK (Reuters) - Global equity markets advanced on Wednesday as investors left behind concerns about Ukraine to focus on the potential for fresh stimulus from China, while the dollar rose on strengthening U.S. economic data.

Gold fell to a 5-week low, giving back early gains, on the stronger dollar.

U.S. Treasuries yields were steady ahead of a sale of $35 billion in new supply. Bond traders said investors were evaluating whether a recent rise in five-year note yields will offer an attractive return relative to the risks of higher interest rates from the Federal Reserve.

Russia and the West drew a tentative line under the Ukraine crisis after U.S. President Barack Obama and his allies agreed to hold off on more damaging economic sanctions unless Moscow goes beyond the seizure of Crimea, which Russian President Vladimir Putin last week said he did not want to do.

The development seemed to limit the odds that the biggest East-West conflict since the Cold War could escalate further, removing a potential headwind from markets. While few U.S. companies have direct exposure to the region, there had been worries about the fallout of prolonged tension. Russia's Micex Index .MCX rose, gaining 1.9 percent.

"I would be shocked if there was any kind of escalation now, which eliminates some of the concerns people had and forces the market to focus back on the economy, where recent data has been lending credence to the theory that some recent issues were related to weather, not fundamentals," said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pennsylvania.

The MSCI emerging equities index .MSCIEF rose the most in almost three weeks, helped by the recovery in Russian stocks and in Poland .WIG20 and Hungary .BUX. Both had been hit by the recent turbulence.

With the Crimean crisis dissipating, investors turned toward China in the hope that Beijing will take steps to bolster its economy. Many economists expect China's growth to miss the government's target of 7.5 percent this year in the absence of effective support measures.   Continued...

A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth