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GLOBAL MARKETS-Buoyant earnings boost stocks, hit dollar

Published 10/15/2009, 04:06 AM
Updated 10/15/2009, 04:09 AM
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* World stocks near 13-month highs

* Japan gains 1.8 percent, Europe up 0.2 percent

* Dollar at fresh 14-month low against majors

By Jeremy Gaunt, European Investment Correspondent

LONDON, Oct 15 (Reuters) - Buoyant corporate earnings lifted investors sentiment again on Thursday, sending world stocks to near 13-month highs.

The dollar fell to a fresh 14-month low against a basket of major currencies while low-yielding government bonds sold off.

"(Stock) momentum is great," said Koen De Leus, economist at KBC Securities. "The market at the moment is driven by liquidity. On the earnings side, every one thinks that financials results are going to be better than expected."

The Dow Jones industrial average pierced the 10,000 level on Wednesday for the first time in a year bolstered by strong results from JPMorgan Chase & Co and Intel Corp.

Bullish sentiment carried over into most equity markets on Thursday. Japan's Nikkei closed up 1.8 percent and the FTSEurofirst 300 was up around 0.2 percent to hit a one-year high for the second straight session.

It lifted MSCI's benchmark all-country world index nearly 0.3 percent to a level last seen in late September 2008, just after the collapse of Lehman Brothers.

The index has now risen about 73 percent since hitting a low on March 9 this year.

Bank of America Merrill Lynch said on Wednesday their monthly survey of fund managers had shown increasing bullishness but that it had not reached the level yet that risk a sharp counter swing.

"Equities remain in a sweet spot: fears of a double-dip have receded, while worries about inflation and monetary tightening are not imminent enough to prevent an October surge in risk appetite," Michael Hartnett, the bank's chief global equity strategist, said in a note.

DOLLAR DOWN

The dollar fell broadly, hitting a 14-month low against the euro and Australian dollar and 15-month trough versus the New Zealand and Canada dollars.

The currency currently suffers when risk appetite rises because of differing prospects for interest rates.

"Firmer equity markets and lower risk aversion continue to depress the dollar," said Adam Cole, global head of FX strategy at RBC Capital Markets.

The euro hit a 14-month high of $1.4967, according to Reuters data.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.2 percent at 75.332 after falling to a 14-month low of 75.211.

Euro zone government bonds extended losses as equities rose.

Ten-year yields were up 3 basis points at 3.270 percent, their highest since late September, with two-year yields up 2 basis points at 1.367 percent. (Editing by Mike Peacock)

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