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GLOBAL MARKETS-Global Stocks hit record highs on stimulus hopes

Matt Scuffham
·4 min read

(Updates prices)

* Nasdaq closes at record high, up 0.5%

* MSCI World Index hits record high, up 0.6%

* S&P 500 up 0.2%

* Fed vows to keep benchmark interest rate near zero

* Dollar recovers some of earlier losses

By Matt Scuffham

NEW YORK, Dec 16 (Reuters) - Global stocks hit record highs on Wednesday as growing hopes of deals on U.S. fiscal stimulus and Brexit and the Federal Reserve's pledge to keep its benchmark interest rate near zero offset concerns over the economic impact of COVID-19.

The U.S. central bank promised to keep funneling cash into financial markets further into the future to fight the recession.

"It's a positive statement," said Quincy Krosby, chief market strategist at Prudential Financial. "They've married a positive projection for next year with the intention to keep an accommodative and ultra-dovish stance until they are certain the economic recovery has taken hold."

U.S. stocks gained after the Fed's statement.

The Nasdaq Composite closed at a record high, adding 63.13 points, or 0.5%, to 12,658.19. The S&P 500 gained 6.55 points, or 0.18%, to 3,701.17. The Dow Jones Industrial Average fell 44.77 points, or 0.15%, to 30,154.54.

"It likely reflects continued confidence on the part of investors who believe low rates for an extended period provides support to stock prices even at these elevated levels," said Rick Meckler, partner at Cherry Lane Investments in New Jersey.

The dollar also recovered some losses, having earlier fallen to its lowest level since April 2018. The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.213 point, or 0.24 percent, to 90.26.

Weaker-than-expected retail sales data in the United States, however, added to growing signs of a slowdown in that economy's recovery from the pandemic recession, shining light on the need for a deal on coronavirus relief.

U.S. congressional negotiators were "closing in on" a $900 billion COVID-19 aid bill that will include a new round of stimulus checks and extended unemployment benefits, lawmakers and congressional aides said.

"Everyone knows that something needs to be done before the holiday," said Edward Moya, senior market analyst at OANDA in New York. "The weaker retail sales report gave a strong indication that sentiment among U.S. consumers is waning."

The MSCI world stock index hit a record high, up 0.6% on the day. The index has climbed 15% since the beginning of November, propelled by trillions of dollars worth of global stimulus.

In Europe, markets were cheered by the possibility of a Brexit trade deal, better-than-expected euro zone PMI economic data and a European Central Bank decision to let euro zone banks start paying dividends again if they have enough capital.

European stocks rose 0.8% with the UK's FTSE 100 index jumping 0.9%.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 6.88 points, or 1.07%, to 647.19.

SHOT IN THE ARM

Progress on rolling out vaccines continued, after Moderna Inc's COVID-19 vaccine appeared set for regulatory authorization this week.

The United States also expanded its rollout of the newly approved vaccine developed by Pfizer Inc and BioNTech SE .

Positive soundings from the European Union on Brexit talks helped lift the British pound on Wednesday above $1.35 and to its highest level against the dollar since May 2018.

Britain and the European Union have moved closer to sealing a new trade deal, but it was still unclear if they would succeed, the bloc's chief executive said.

The euro rose above $1.22 for the first time since April 2018, and German government bond yields, which tend to rise on positive news on the economic outlook, hit a one-week high after data showed better-than-expected business activity in the bloc this month.

A long-overdue U.S. Treasury report on the foreign exchange practices of U.S. trading partners labeled several countries, including Switzerland and Vietnam as currency manipulators and added others to a watchlist.

The news helped Bitcoin smash through $20,000 for the first time.

Spot gold prices rose $9.731, or 0.53%, to $1,863.19 an ounce. U.S. gold futures settled up 0.2% at $1,859.10.

Brent crude settled up $0.32, or 0.63%, at $51.08 a barrel. U.S. crude settled up $0.20, or 0.42%, at $47.82 per barrel. (Reporting by Matt Scuffham; editing by Bernadette Baum and Jonathan Oatis)