* U.S. stocks seen firmer with Dow index at a record level
LONDON, April 10 (Reuters) - Strong Chinese import data and
Japan's economic stimulus package helped to lift world equity
markets to a one-week high on Wednesday and sent the yen to a
three-year low against the euro.
Wall Street was poised to set fresh records when it opens
with the broad S&P 500 index just half a percentage point
away from its all-time high and stock index futures pointing up.
Sentiment was lifted by trade data from China that showed a
surprisingly sharp surge in imports, seen as a signal that the
domestic demand needed to drive a recovery in the world's second
largest economy was gathering pace.
The data boosted mining and basic resources stocks, and
supported industrial commodities including oil, aluminium and
nickel. However, some analysts said slow export growth in the
data left a more mixed picture on the global economic outlook.
"Exports to the U.S. and Europe were a bit disappointing,
so on the whole, I would say it's more a mixed bag than a very
positive bag of data." said Adrian van Tiggelen, senior
investment specialist at ING Investment Management.
The MSCI all-world share index,, which
tracks stocks in 45 countries, rose 0.5 percent to its highest
level since April 3 while Japan's key Nikkei index ended
0.7 percent higher at its highest close since August 2008.
The gains also followed Wall Street's strong session on
Tuesday when the Dow Jones industrial average posted a
record closing high as investors were encouraged by a promising
start to the earnings season.
Europe's FTSEurofirst 300 index had risen by about
one percent by midday, while across the region London's FTSE 100
, the Paris CAC-40 and Frankfurt's DAX
rose by 0.8 to 1.2 percent.
European markets were also bolstered by growing hopes of an
interest rate cut by the European Central Bank, and signs of
progress in dealing with the region's debt crisis after
international lenders said Ireland and Portugal should get more
time to repay their bailout loans.
Recent weakness in U.S. jobs data has also increased
expectations that minutes from the Federal Reserve's most recent
policy meeting, due out at 1800 GMT, will show the central bank
sticking with its aggressive monetary easing policy.
In the currency markets, the yen hit a more than three-year
low against the euro and edged closer to 100 to the dollar as it
extended a slide triggered by the Bank of Japan's (BOJ) massive
monetary easing plan unveiled last Thursday.
The euro is being supported by speculation that Japanese
investors, looking for higher returns as the BOJ action
depresses domestic yields, may turn to euro zone bonds.
"There is some talk that people are dumping Japanese assets
and hunting for yields (with euro zone assets), and it is
probably on the back of this the euro has been supported," said
Vasileios Gkionakis, global head of FX strategy at UniCredit.
The common currency was up 0.4 percent against the yen to
about 130 yen and reached a one-month high against a
mostly steady dollar of around $1.31.
The greenback also rose against the yen, gaining 0.3 percent
to 99.35 yen but was being held back from making further
gains by large currency options close to the 100 mark.
These options contracts have generated demand from banks to
buy the yen and sell dollars to protect their exposure, and once
they expire the dollar could surge.
Comments from Bank of Japan Governor Haruhiko Kuroda,
indicating that the central bank had taken all necessary steps
for now to achieve its inflation target, helped the yen recover
some of its losses during European trading.
The dollar has jumped around 7 percent against the yen since
Thursday's BOJ announcement that it would pump about $1.4
trillion into the economy and double Japan's monetary base in
two years to defeat deflation.
The prospect of huge purchases of Japanese government bonds
(JGBs) by the BOJ is seen as likely to send investors on a hunt
for higher returns in assets denominated in currencies other
than the rapidly-weakening yen.
Japanese government bond futures fell so sharply on
Wednesday that the Tokyo Stock Exchange had to halt trading
briefly while the 10-year cash bond yield rose to a four-week
However, highly-rated euro zone bond yields, which have
fallen on the hopes of Japanese demand, recovered from their
lows when a wave of newly-issued bonds absorbed much of the
Around 9 billion euros' worth of top-rated debt was sold,
adding to 14 billion euros of bonds issued on Tuesday. The U.S.
Treasury also plans to sell $21 billion in 10-year notes later
and will sell $13 billion of 30-year bonds on Thursday.
U.S. T-note yields were 1.7 basis points higher
on the day at 1.76 percent, while German 10-year yields
were 2 basis points higher at 1.28 percent.
In the oil market the signs of a strengthening Chinese
economy added to support from geopolitical concerns, especially
growing tension on the Korean peninsula and in the Middle East.
North Korea, which has threatened war, has moved a
long-range missile in readiness for a possible test launch while
Iran, engaged in a dispute with Western nations over its nuclear
programme, said it had begun operations at two uranium mines.
However signs of growing oil stockpiles were weighing on
crude prices, leaving Brent futures down 0.5 percent at
$105.65 per barrel. U.S. crude fell 0.55 percent to
$93.65 a barrel.
Industrial metals, meanwhile, were adding to recent gains,
helped by the improving trade data from top consumer China.
Aluminium rose 0.25 percent to $1,923.75 a tonne,
zinc added 0.5 percent to $1,930, lead gained
0.9 percent to $2,108 and tin edged up 0.02 percent to $22,975.