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GLOBAL MARKETS-Stocks, euro push higher as ECB stimulus plan looms

Published 08/12/2016, 08:35 pm
Updated 08/12/2016, 08:40 pm
© Reuters.  GLOBAL MARKETS-Stocks, euro push higher as ECB stimulus plan looms
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* World share markets climb for 4th day, Wall Street at record

* ECB to detail plans to extend stimulus

* China trade beats forecasts, commodity imports jump

* Euro unfazed as Moody's turns negative on Italy rating

* Oil prices steady after slip, steel surge lifts iron ore

* Graphic: World FX rates in 2016 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Dec 8 (Reuters) - World shares climbed to a near three-month high on Thursday as encouraging China data and a record high Wall Street kept traders upbeat ahead of an expected extension of the European Central Bank's already generous stimulus programme.

Asia had shares hustled to one-month highs after Wall Street strode to another record and European stocks .FTEU3 made it four gains on the bounce and the euro EUR= neared month highs as the prospect of ECB support loomed. is an outside chance the bank could signal an eventual scaling down of the aid, but most economists expect it to extend its 80 billion euro-a-month bond buying for at least another six months and add a few tweaks to keep it running smoothly.

"Post the U.S. elections and Italian referendum the market is overwhelmingly expecting unchanged monetary policy," said Aberdeen Asset Management Investment Manager Patrick O'Donnell.

"The risk is we get a more hawkish interpretation of inflation dynamics... and any whiff that they are not committed to the asset purchase programme will see the market react negatively."

Bond markets had barely budged as traders retreated to the sidelines ahead of the ECB, which announces its decision at 1145 GMT and holds a news conference at 1230 GMT.

Risk appetite got an extra boost overnight when China reported upbeat trade figures with exports and imports both beating forecasts. Resource imports were very strong, a major reason prices for bulk commodities have been strong. resource-heavy and China-sensitive Australian market .AXJO jumped 1.2 percent, as did MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS .

An all time-peak for Samsung Electronics 005930.KS helped lift South Korea .KS11 2 percent. Tokyo's Nikkei .N225 put on 1.45 percent as it brushed off a disappointing downward revision to Japan's third quarter growth. (China data) improvement reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note," said Capital Economics' Julian Evans-Pritchard.

EXTENSION QUESTION

The bullish mood around the ECB outweighed news that Moody's had changed its outlook on Italy to negative, warning it may downgrade the credit rating if the country's deteriorating economic and debt outlook was not reversed.

The euro took the move with aplomb, edging up to $1.0776 EUR= from an early trough of $1.0750. European bourses were up 0.2 to 0.5 percent and Italian bank shares .FTIT8300 hit their highest since June after reports Rome would step in to rescue troubled bank Monte dei Paschi BMPS.MI . .EU

Markets have been surprisingly buoyant in the wake of Italy's "No" vote last weekend on a constitutional reform referendum, in part on hopes for continued support from the ECB which may widen the type of bonds it buys.

All of which has been putting downward pressure on yields of European peripheral debt, with buying spilling over to German bunds and U.S. Treasuries. Yields on 30-year Treasury debt fell by 6 basis points on Wednesday, the biggest daily decline since August.

That drop nudged the dollar down to 113.30 yen JPY= , while the dollar index dipped 0.2 percent .DXY as it continued to cool after rallying following Donald Trump's U.S. election win and as the Federal Reserve prepares to raise U.S. interest rates next week. prospect of higher borrowing costs has certainly not fazed Wall Street, which hit fresh records on expectations the Trump administration will eventually deliver fiscal stimulus and deregulation. U.S. futures pointed to a steady start later.

"Investments and policies that have done well in a low-rate, low-growth world have reached their peak. Long-term winners could be supplanted in 2017," said analysts at BofA Merrill Lynch in their year ahead outlook.

In commodity markets, oil steadied after slipping on doubts that production cuts promised by OPEC and Russia would be deep enough to end a supply overhang. O/R

Brent futures LCOc1 were quoted up 18 cent at $53.22, while U.S. crude CLc1 added 17 cents to stand at $49.95.

Gold XAU= nudged higher and commodities including iron ore and coking coal held recent hefty gains as Chinese demand drove steel prices to their highest since April 2014. imports of iron ore, crude oil, coal, soybeans and copper all surged in November, customs data showed. in the currency market, New Zealand's dollar was the biggest gainer amongst the major currencies. The head of the country's central bank made it clear in a speech that the bank was probably done with cutting interest rates. FRX/

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