Shares, dollar rise on upbeat data

Reuters
A visitor walks past logos at the TSE in Tokyo
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A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013. REUTERS/Toru Hanai

By Marc Jones

LONDON (Reuters) - Upbeat economic data powered Asian and emerging share markets to a fourth straight day of gains on Tuesday, while gold and the yen lost some of their safe-haven appeal as Washington delayed a possible strike on Syria.

European shares opened higher, helped by a second huge mobile telecoms deal in as many days as Microsoft (MSFT.O) announced a $7.2 billion bid for the phone business of once-dominant Finnish manufacturer Nokia (NOK1V.HE).

The dollar was also in a bullish mood, hitting its highest in over a month against both the yen and the euro as the prospect of a cut in U.S. monetary stimulus complemented the flows caused by reduced tensions in the Middle East.

"The Syria situation is clearly a short-term disturbance but we don't expect it to disrupt the U.S. recovery or even the European recovery," said Didier Duret Chief Investment Officer for ABN Amro.

"The volatility we are seeing now is a good period to accumulate (equities) with the medium-term in mind."

After some choppy initial moves, Europe's FTSEurofirst 300 (.FTEU3) was up 0.2 percent by 0745 GMT, led by Britain's FTSE 100 (.FTSE) and Germany's DAX (.GDAXI). France's CAC 40 (.FCHI) and Milan's FTSE (.FTMIB) both lost 0.2 percent.

Earlier MSCI's broadest index of Asia-Pacific shares outside Japan added 0.76 percent, building on Monday's 1.2 percent rise and marking a fourth day of gains.

The Nikkei stock average (NIK:^9452) was the region's standout performer. It surged 3 percent to a three-week high helped by the weaker yen, hopes of continued government stimulus and talk Japan could win the right to host the 2020 Olympic Games.

After Monday's upbeat round of global data, China's non-manufacturing purchasing managers' index (PMI) dropped slightly to 53.9 last month from July's 54.1. But it remained solidly in expansion territory and suggested recent government measures are supporting the economy.

FLIGHT FROM SAFETY

As investors rediscovered an appetite for risk, gold eased about 0.2 percent to $1,391.49 an ounce while the dollar hit a one-month high against a basket of currencies as well as the yen. The greenback bought 99.70 yen, and the dollar index (.DXY) rose to 82.379, also underpinned by U.S. monetary policy expectations.

"I expect the dollar to be supported amid expectations that the Federal Reserve will start tapering its quantitative easing," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Traders expect the Fed to start reducing its stimulus at its policy meeting on September 17-18 unless U.S. payroll numbers due on Friday fall considerably short of forecasts.

While tapering expectations support the dollar, a near-term withdrawal of stimulus would weigh on equities, particularly those in emerging markets that have come under pressure in recent months on expectations of capital outflows.

"It's not a question of whether the U.S. Federal Reserve will cut quantitative easing, it's a matter of how much and the pace of their reduction," said Jackson Wong, Tanrich Securities' vice-president for equity sales.

AUSSIE BOUNCE

Australia's dollar bounced more than half a cent as its central bank kept interest rates at a record low 2.5 percent as expected on Tuesday, saying the level was appropriate though it could ease again if needed.

While Wall Street was closed for the Labor Day holiday on Monday, U.S. stock futures pointed to solid gains when trading resumes later with the S&P 500 contract up 0.9 percent.

With all eyes on what the Fed does with it stimulus program, ISM manufacturing data due at 1400 GMT (9:00 EDT) will be in sharp focus ahead of all-important jobs data on Friday.

The upbeat global manufacturing data continued to underpin commodities, with copper prices up 0.3 percent at $7258 a tonne (1.1023 ton), after the previous session's 2 percent rise.

Markets were also unwinding many of last week's safe-haven trades as worries about an imminent military strike against Syria abated after U.S. President Barack Obama decided to seek congressional approval.

Obama's efforts to persuade Congress to back his plan met with skepticism on Monday from lawmakers in his Democratic Party, who expressed concern the United States would be dragged into a new Middle East conflict.

U.S. crude oil prices slipped 0.7 percent to $106.85 a barrel, while Brent lost about 0.2 percent to $114.11.

(Additional reporting by Lisa Twaronite in Toko and Wayne Cole in Sydney; Editing by John Stonestreet)

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