Dollar set for record run, Euro­pean shares rise


The dollar was on track on Fri­day for its best run since it was floated in 1971, notch­ing up a sev­enth straight month of gains, while Euro­pean shares headed for their best monthly per­for­mance in more than three years.

Cheered by up­beat Ger­man re­tail sales, which posted their big­gest an­nual rise in 2-1/2 years in De­cem­ber, the panEuro­pean FTSEurofirst 300 in­dex ad­vanced on Fri­day, with Ger­many's DAX in­dex ris­ing 0.6 per­cent.

Euro­pean gains tracked a late rally on Wall Street on Thurs­day, where strongerthan-ex­pected U.S. jobs num­bers and a rally in Ap­ple and Boe­ing helped off­set some dis­ap­point­ing earn­ings.

"Re­tail sales in Ger­many and Spain, as well as con­sumer spend­ing in France, are above ex­pec­ta­tions. Th­ese are the first signs for the pos­i­tive im­pact from low oil prices and are a good sup­port for eq­ui­ties," Chris­tian Stocker, eq­uity strate­gist at UniCredit in Mu­nich, said.

Ahead of euro zone in­fla­tion data due at 1000 GMT, yields on the cur­rency bloc's low­est-rated bonds dropped, as de­fla­tion risks took cen­ter stage again af­ter re­as­sur­ances from the new Greek gov­ern­ment that it is look­ing for com­mon ground on their bailout prob­lem.

Af­ter a bout of in­vestor nerves ear­lier in the week af­ter the left-wing anti-aus­ter­ity Syriza party won power, Greek shares tracked higher on Fri­day. The bank­ing in­dex rose 9.1 per­cent, adding to a 12.9 per­cent re­bound on Thurs­day.

The euro also edged higher, trad­ing up 0.2 per­cent at $1.1344, 2-1/2 cents above an 11-year low of $1.1098 hit at the be­gin­ning of the week, and on track for its first week of gains in seven. But the sin­gle cur­rency is still down over 6 per­cent for the month, its worst per­for­mance in 2-1/2 years, hav­ing fallen on the ex­pec­ta­tion, and then the con­fir­ma­tion, that the Euro­pean Cen­tral Bank would launch a full-scale quan­ti­ta­tive eas­ing pro­gram to shore up a flail­ing euro zone econ­omy.

Those gains have helped the dollar gain al­most 5 per­cent against a bas­ket of cur­ren­cies so far this year as traders bet that the U.S. Fed­eral Re­serve will be the first ma­jor cen­tral bank to raise in­ter­est rates. The dollar in­dex was last down 0.2 per­cent at 94.5697, close to an 11-year high. "There are a lot of in­vestors wait­ing for a move higher in the euro to reload (on the dollar)," said Michael Sneyd, a cur­rency strate­gist at BNP Paribas in Lon­don. "We are still dollar bulls."

Gold edged up on Fri­day and was set for its big­gest monthly gain in al­most a year af­ter a rally fu­eled by the ECB's an­nounce­ment of its 1.1 tril­lion euro QE pro­gram. Brent crude edged up to $49.3 a bar­rel, hav­ing found some sup­port from China, where new com­mer­cial crude re­serves reg­u­la­tions are likely to boost im­port de­mand.

Asian shares had wa­vered be­tween pos­i­tive and neg­a­tive ter­ri­tory, with Ja­pan's Nikkei stock av­er­age adding about 0.4 per­cent.

In­vestors were likely to re­main cau­tious ahead of fourth-quar­ter U.S. gross do­mes­tic prod­uct data at 1330 GMT. A Reuters poll tipped the econ­omy to have grown 3.0 per­cent.

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