Global stocks near fresh highs, U.S. data in focus

Wed Jul 2, 2014 7:36am EDT
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By Lionel Laurent

LONDON (Reuters) - Global shares advanced toward fresh highs on Wednesday after European markets tracked gains in Asia, with investors looking to see if U.S. employment figures continue a run of upbeat data that has driven Wall Street to record highs.

Economic indicators in most regions are pointing to a pick-up in production and offering support to equities despite stretched valuations.

Risk appetite has also been whetted by dovish central bank monetary policy, with the lack of rate hike hints from the Federal Reserve keeping the dollar stuck near two-month lows.

The MSCI World Index, which tracks stocks from developed economies, rose 0.2 percent, to 1,757.84 points, close to all-time highs.

The pan-European FTSEurofirst 300 equity index was up 0.4 percent at 1107 GMT, while German bund futures were trading broadly flat. France bucked the broadly positive trend in Europe, with the blue-chip CAC 40 index dragged down by telecoms groups after Orange said it had ditched plans to take part in any domestic tie-ups.

"Investors are making only slight position adjustments," said Nick Beecroft, analyst at Saxo Bank. "The low volatility environment is spooky and slightly unnerving. "Economists awaited the European Central Bank policy meeting on Thursday for more guidance after fresh data showed that falling energy costs depressed euro-zone industrial prices in May, marking the fifth consecutive monthly fall and underlining the low inflation that is plaguing the single currency bloc.

Industry data in Britain, meanwhile, showed a surge in home-building helped construction activity there to grow at its fastest annual pace in four months in June, bucking expectations for a slowdown.

Investors also focused on the ADP private-sector survey due at 1215 GMT along with a speech from U.S. Federal Reserve head Janet Yellen at 1500 GMT. Her recent dovish bias, especially after the latest Fed meeting, has been a major factor that has led investors to cut favorable positions in the dollar. "At the time Yellen seemed determined to give as little support as possible to rate hike speculation," said Esther Reichelt, currency strategist at Commerzbank. "This is unlikely to be any different today. But the market is waiting for Fed signals and therefore already small hints can be sufficient to affect the dollar."   Continued...

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