Global stocks extend rally for third day

Dollar slightly higher against major rivals

LONDON: Global stocks extended a rally into a third day yesterday as oil edged up from 11-year lows and the dollar eked out minor gains in trade gradually winding down for the holidays. European shares rose on the last full trading day before the Christmas break, following Asian bourses higher. The pan-European FTSEurofirst 300 index rose 1.5 percent, led by miners which rallied on higher copper prices. London-listed miners Glencore and Anglo American both rose more than 4 percent. “We think commodities are due for a bounce, and that should help mining stocks,” HED Capital managing director, Richard Edwards, said.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent to the highest in almost two weeks. Tokyo markets were closed for the Emperor’s Birthday holiday. In China, the blue-chip CSI 300 index broke a four-day winning streak and closed down 0.3 percent while the Shanghai Composite index ended down 0.4 percent. China’s state news agency Xinhua said slashing the country’s excess steel capacity would be a top priority for the government over the next five years. MSCI’s all-country world stocks index was up 0.36 percent, though it is down 4.5 percent for the year.

Equity investors were encouraged after gains of 1 percent in the Dow Jones industrial average lifted Wall Street for a second day on Tuesday. Data on Tuesday showed US economic growth in the third quarter was revised down slightly to a 2.0 percent annual pace but this still beat forecasts. Oil prices struggled to lift off lows plumbed earlier in the week. Brent crude, the global benchmark, stood at $36.50 a barrel, up 39 cents, having touched an 11-year low of $35.98 late on Tuesday. The dollar strengthened versus the euro and held broadly steady against a basket of major currencies. The euro fell 0.3 percent to $1.0922 while the Japanese yen was barely changed at 120.97 per dollar.

The euro has performed well this year at times of risk aversion, as investors have unwound carry trades in which the euro is borrowed then sold for higher-yielding currencies. “When you are in an environment where rate expectations are stable, the euro is mostly driven by risk sentiment,” said Credit Agricole currency strategist Manuel Oliveri in London. “So we could imagine that the euro goes to $1.10 or so into the end of the year.” Yields on low-risk government bonds were little changed. German 10-year Bunds, the euro zone benchmark, yielded 0.61 percent, up 1 basis point on the day. Ten-year US Treasuries yielded 2.239 percent, unchanged from Tuesday’s close in New York. Gold traded at $1,071.60 an ounce. — Reuters