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UK pick-up lifts European shares, Wall Street eyes Apple

Source : REUTERS
Last Updated: Thu, Oct 25, 2012 12:20 hrs
Traders work on the floor of the New York Stock Exchange

By Marc Jones

LONDON (Reuters) - Global shares and commodity markets rose on Thursday, pulled out of their recent slide by encouraging data from Britain and China and the U.S. Federal Reserve's latest commitment to support growth.

Britain left recession in the third quarter, as its recent hosting of the Olympics helped it post its strongest quarterly GDP growth in five years, official data showed.

Also lifting the mood were comments from China's Ministry of Industry and Information Technology that the country's factory output should pick up towards the end of the year and a survey showing orders there at their highest levels in months.

U.S. stock futures pointed to a higher opening on Wall Street when trading resumes, with results from technology giant Apple and housing and employment figures set to dominate.

European shares, which dropped 3 percent in the first half of the week, were feeling the benefit of the more positive market tone ahead of the U.S. open, with the FTSEurofirst300 <.FTEU3> index 0.6 percent higher at 1100.25 points.

London's FTSE 100 <.FTSE>, Paris's CAC-40 <.FCHI> and Frankfurt's DAX <.GDAXI> were all firmly in positive territory and the MSCI index of global shares <.MIWD00000PUS>, which has also suffered in recent days, was up 0.3 percent.

"The UK GDP data clearly surprised on the upside, that has helped the market a lot," said Tobias Blattner of Daiwa Securities.

"And in Greece there are clearly signs that there is an agreement with the Troika and it will be given two more years and there will a third bailout package, so things are clearly moving in the right direction.

In currency markets, the progress in Greece saw the euro claw back to $1.30 following its recent weakness and the stronger-than-expected performance from Britain's economy sent sterling up against the dollar and euro.

The dollar meanwhile hit a four-month high against the yen aided by a growing belief among investors that the Bank of Japan will unveil further monetary easing next week.

China's yuan closed at a record high as a increase in demand from firms pushed it to top of its recently enlarged trading range.

USEFUL LINKS:

PMI-U.S., euro zone and China: http://link.reuters.com/qes53t

Bank deposits http://link.reuters.com/weq58s

APPLE EYED

The Federal Reserve on Wednesday stuck to its plan to keep stimulating U.S. growth until the job market improves, as it acknowledged some parts of the economy were looking a little better.

Apple's results later come alongside earnings from a host of other major global firms including Amazon , Coca-Cola Enterprises , Colgate-Palmolive , ConocoPhillips and Procter & Gamble .

"The main focus for the coming weeks is the company results to try and get some confidence," said ABN Amro's top equity strategist, Sybren Brouwer.

"We have recently upgraded our equity stance. For now it is rather a matter of not getting too many disappointments than getting a real big boost."

Back in Europe data from the European Central Bank provided some welcome relief for crisis-strained Spain, showing the recent haemorrhaging of deposits from banks there stopped last month.

For the euro zone as a whole though, other figures from the bank showed lending to firms in the region fell at an increased rate, down 20 billion euros.

Sweden's central bank, the Riksbank, pointed to the euro zone's troubles as it said it was likely to cut interest rates this year. It came after the Philippine central bank cited global growth concerns as it cut rates to a new low.

Economists believe the ECB may soon follow. "With the Eurozone facing a difficult fourth quarter after almost certainly suffering further GDP contraction in the third quarter ... We have pencilled an (ECB) interest rate cut to 0.50 percent in December," said IHS Global Insight's Howard Archer.

Following the broader rise in appetite for risk assets, German government bonds fell, mirroring falls in U.S. Treasuries after the Federal Reserve held course on monetary policy on Wednesday.

British government bonds also fell as investors cashed in recent gains after the better-than-expected UK growth numbers.

Oil prices rose back above $108 a barrel, after falling for a seventh consecutive session on Wednesday.

The better Chinese data also helped London copper which added 0.7 percent to $7,872 a tonne and gold which edged up 0.8 percent to $1,714.36 an ounce.

"The major thing to look out for is what central banks are doing, central bank moves are more important," said Christin Tuxen, analyst with Danske Bank.

"With interest rates set to be low over a period of time, gold is set to perform well in the near term," she added.

(Additional reporting by David Brough; Editing by Philippa Fletcher and Giles Elgood)




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