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GLOBAL MARKETS-Stocks near highs, dollar drifts after Fed see hike "fairly soon"

Published 23/02/2017, 09:06 pm
Updated 23/02/2017, 09:10 pm
© Reuters.  GLOBAL MARKETS-Stocks near highs, dollar drifts after Fed see hike "fairly soon"

* Stocks hold near highs as markets digest Fed minutes

* Policymakers see rate hike "fairly soon" but uncertainty remains

* Dollar edges up but below Wednesday highs

* Oil up on lower U.S. crude stocks

* Copper, other metals, drop and weigh on miner shares

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Nigel Stephenson

LONDON, Feb 23 (Reuters) - World stocks held near record highs on Thursday and the dollar eked out minimal gains after minutes of the latest U.S. Federal Reserve meeting showed policymakers in no big hurry to raise interest rates.

U.S. and euro zone government bond yields fell or held steady as the minutes did nothing to firm up expectations of a rate rise in March. That remains a slim prospect, with futures pricing in only an 18 percent chance, according to the CME Group's (NASDAQ:CME) FedWatch tool.

The pan-European STOXX 600 .STOXX stocks index was marginally higher and close to 14-month highs touched on Tuesday. A 4 percent fall in miner Rio Tinto RIO.L and a fall of nearly 5 percent in EasyJet EZJ.L , which were among companies whose shares went ex-dividend, weighed on the index.

Miners generally dipped .SXPP as metals fell.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1 percent, hovering near the highest level since July 2015 it hit on Wednesday. Earlier, the index lost as much as 0.15 percent.

Japan's Nikkei .N225 closed fractionally lower, as banks fell, and Australian shares .AXJO ended down 0.4 percent.

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MSCI's world index .MIWD00000PUS also nudged higher and was within half a point of Wednesday's record high.

The minutes showed many Fed policymakers said it may be appropriate to raise rates "fairly soon" if jobs and inflation data met expectations. But they also highlighted deep uncertainty over President Donald Trump's economic programme.

Many in markets expect rates to rise in June.

The dollar edged up less than 0.1 percent against a basket of major currencies .DXY but held below highs hit on Wednesday, having fallen immediately after the minutes were released.

The euro EUR= , which has been buffeted by investor nerves over France's presidential election, to be held in April and May, was flat at $1.0556. The yen JPY= was also barely changed at 113.28. Sterling GBP=D4 strengthened 0.2 percent to $1.2468.

Along with Trump's policies on taxes, spending and trade, markets have been trying to gauge his attitude to the dollar.

He said before his inauguration that the dollar's strength against the Chinese yuan was "killing us", raising concern in the "strong dollar" policy espoused by recent U.S. administrations could change.

However, Treasury Secretary Steven Mnuchin praised the strong dollar on Wednesday, telling the Wall Street Journal it reflected confidence in the economy on 10-year U.S. Treasury bonds US10YT=RR held steady at 2.415 percent, having fallen after the minutes.

German equivalents, the benchmark for euro zone borrowing, edged up 1 basis point to 0.28 percent DE2YT=TWEB , having closed on Wednesday at 0.27 percent.

French 10-year yields fell 2 bps to 1.01 percent FR10YT=TWEB , reducing the premium investors demand to hold French rather than German debt, as the emergence of a centrist pact eased concerns over the upcoming election.

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Francois Bayrou decided not to stand and struck an alliance with centrist candidate Emmanuel Macron, a move that is seen boosting Macron's chances. Far-right, anti-euro party leader Marine Le Pen increased her first-round lead, a new poll showed, but is still not expected to win the run-off developments in France were positive for French bonds and broader risk appetite," said Orlando Green, European fixed income strategist at Credit Agricole (PA:CAGR) in London.

Oil prices rose after data showed a decline in U.S. crude stockpiles as imports fell. Brent crude LCOc1 last traded at $56.56, up 72 cents a barrel.

Prices have been rising since the Organisation of Petroleum Exporting Countries and other oil producers agreed output cuts last year.

"It's a battle between how quick OPEC can cut without shale catching up," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

Copper fell almost 1 percent CMCU3 to $5,982 a tonne on concern about fresh regulation that could affect China's property boom.

Gold XAU= rose less than 0.1 percent to $1,238 an ounce, supported by uncertainty over the Fed rate outlook. Zinc CMZN3 and nickel CMNI3 also fell more than 1 percent.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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