Global shares rise, euro falls as central banks in focus

Fri Nov 20, 2015 4:53pm EST
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By Lewis Krauskopf

NEW YORK (Reuters) - Shares in major markets gained on Friday and the euro weakened against the dollar as investors anticipated actions by U.S. and European central banks next month.

The benchmark U.S. S&P 500 posted its best week in almost a year, while Europe's main stock index tallied its strongest week in a month. U.S. Treasuries prices fell, with rising U.S. stock prices reducing the appeal of lower-yielding government debt.

The head of the European Central Bank, Mario Draghi, offered the strongest hint yet that the ECB will unveil fresh stimulus measures at its Dec. 3 meeting.

"Any siren call from a central bank, particularly a systemically important one, about more largesse on the part of that central bank’s balance sheet to try to reflate economic activity is sort of a cause-and-effect for why financial assets then accompany in that rally," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Investors in recent days have also increasingly come to expect that the U.S. Federal Reserve will raise interest rates next month, which would be the first rate increase in almost a decade.

The head of the New York Fed, William Dudley, said the Fed should "soon" be ready to raise interest rates as U.S. central bankers grow confident that low inflation will rebound and that employment will remain stable.

"We've seen a nice bounce in stocks as they've digested to the likelihood of a December rate hike," said Kim Rupert, managing director of global fixed-income analysis at Action Economics in San Francisco.

The Dow Jones industrial average .DJI rose 91.06 points, or 0.51 percent, to 17,823.81, the S&P 500 .SPX gained 7.93 points, or 0.38 percent, to 2,089.17 and the Nasdaq Composite .IXIC added 31.28 points, or 0.62 percent, to 5,104.92.   Continued...

Traders work on the floor of the New York Stock Exchange November 6, 2015. REUTERS/Brendan McDermid