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GLOBAL MARKETS-Shares gain as Wall Street record outweighs jitters over growth

Published 19/08/2020, 09:41 pm
© Reuters.
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* Euro STOXX 600 up 0.3%

* BA owner gains on shorter quarantine hopes

* Dollar claws back from 27-month low

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Tom Wilson

LONDON, Aug 19 (Reuters) - European shares gained ground on Wednesday as a record high on Wall Street outweighed simmering worries over a resurgence in coronavirus cases that could undermine a nascent recovery.

The broad Euro STOXX 600 .STOXX added 0.3% in choppy trading, with indexes in Frankfurt .GDAXI and London .FTSE gaining similar amounts.

Among the bright spots were travel and leisure shares, with British Airways-owner ICAG.L up 2.4% on a British plan to use COVID-19 testing at London's Heathrow Airport to help cut the number of days travellers have to spend in quarantine. oil and gas .SXEP and utilities .SX6P shares weighed, with BP BP.L and Royal Dutch Shell RDSa.L losing around 0.7% as crude prices fell on worries over demand and rising COVID-19 cases in Europe.

Earlier, MSCI's broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS fell 0.2%, retreating from a seven-month high reached after the S&P 500's .SPX record, powered by looser monetary policy and charging tech stocks.

Wall Street futures ESc1 pointed to slim gains.

Strategists said the jittery mood in both Europe and Asia was symptomatic of a growing focus for investors on where to put money before a coronavirus vaccine is found.

Money has poured into U.S. growth stocks - the tech giants and retail titans that have benefited most from the recovery - as investors worry that, in the absence of a vaccine, a rise in coronavirus cases could further hurt "value" shares.

"It's hands down the biggest dilemma out there at the moment," said Mike Bell, global market strategist at J.P. Morgan Asset Management.

"If you get a vaccine, you are going to see a big rotation out of the stocks that have done very well this year - the growth stocks, the tech stocks - into the beaten-up value stocks - the hotels, the airlines."

Overnight, U.S. stocks set records as investors gravitated to the stay-at-home winners from COVID-19 lockdowns, such as Amazon AMZN.O and Netflix NFLX.O .

The benchmark S&P 500 surpassed its February all-time high, hit just before the onset of the COVID-19 pandemic pummelled stocks to lows on March 23.

It has surged about 55% since those lows, fuelled by monetary stimulus packages even as alarm bells ring over the underlying health of the economy and as negotiations over fiscal stimulus in Washington drag on.

The MSCI world equity index .MIWD00000PUS , which tracks shares in 49 countries, gained 0.1%.

DOLLAR FLOORED

The U.S. Federal Reserve's intervention in financial markets to maintain liquidity has pushed riskier assets to all-time highs and reduced demand for safe-havens, battering the U.S. dollar.

The greenback =USD clawed away from a 27-month low touched overnight, gaining 0.1% against a basket of currencies to 92.259.

"The U.S. dollar left the building overnight," said Jeffrey Halley, senior market analyst at Oanda, citing the prospect for further loosening of policy by the Federal Reserve as the trigger.

Markets were also awaiting minutes from the Fed's recent meeting due later in the day for any hints on what the Fed could announce in September.

"We are expecting a clear dovish message from the Fed in September," MUFG analysts wrote in a note.

Brent crude futures LCOc1 fell 35 cents, or 0.8%, to $45.11 a barrel, on concerns that U.S. fuel demand may not recover as quickly as expected amid stalled talks on an economic stimulus package. O/R

For Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/

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