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GLOBAL MARKETS-Chinese data helps world stocks hit 15-month high

Published 01/11/2010, 07:33 AM
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* Global equities up for 6th day, at 15-month peak * Chinese trade data boosts market sentiment

* Dollar down on Friday's U.S. jobs data, Fed comment

By Atul Prakash

LONDON, Jan 11 (Reuters) - World stocks rose for the sixth session running on Monday, hitting a 15-month high, with stronger trade data from China boosting optimism about the global economy while the dollar remained under pressure.

The dollar slipped following Friday's weak U.S. jobs data and comments from a Federal Reserve official that interest rates in the United States are likely to stay low for quite some time.

Cold weather in the United States and Europe, a weaker U.S. currency and concerns over gasoline supplies following a fire at Korea National Oil Corp's Newfoundland refinery in Canada helped oil to jump more than $1 to a 15-month high.

Stronger-than-expected Chinese export and import data and a fall in the dollar also boosted commodities, with gold rising 1.7 percent to a 5-week high, copper jumping 3 percent and aluminium advancing more than 2 percent.

China's exports leapt 17.7 percent from a year earlier, dwarfing the 4.0 percent rise forecast by economists and breaking a 13-month streak of year-on-year declines. Imports surged 55.9 percent, much more than the 31 percent increase markets had expected.

"China is one of the biggest exporters in the world and they will play a very strong hand in the global economic recovery. That is why this news has been received very well by investors," said Joshua Raymond, market analyst at City Index.

Despite the indications of gathering economic momentum, Finance Minister Xie Xuren said China would stick to its pro-growth fiscal stance, warning that withdrawing spending too early could damage the economy.

Global equities measured in the MSCI All-Country World Index rose 0.9 percent to 309.95 points after rising to 310.08, the highest since late September of 2008. The FTSEurofirst 300 of top European shares hit a 15-month peak, boosted by financial and energy stocks.

Investor appetite for risky assets such as equities grew, with the VDAX-NEW volatility index falling to a 16-month low before paring losses. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher the market's desire to take risk.

Investors also braced for results from aluminium major Alcoa , due to kick off the U.S. earnings season on Monday.

DOLLAR BEARS

The U.S. currency continued to be under pressure after data on Friday showed U.S. employers cut 85,000 jobs last month, disappointing many in the market who had expected the U.S. economy to stop losing jobs..

The dollar, down 0.7 percent against a basket of major currencies, also extended falls after St. Louis Federal Reserve Bank President James Bullard said rates may remain low for some time, although he said Fed policy was unlikely to be pushed off course by December's weak jobs data.

"The dollar went sour after the non-farm payrolls data," said Dag Muller, strategist at SEB in Stockholm. "It feeds the thought that there will be a prolonged period of time before the Fed hikes rates, which is what Bullard said."

"Stocks are higher too and oil is bid, which is another driver of a weaker dollar," Muller added.

The euro rose 0.8 percent to $1.4538, having hit its highest in more than three weeks at $1.4542. The next big resistance is seen around $1.4570 and a break of that would suggest a gradual recovery towards $1.4800, traders said.

European credit default swap indexes tightened and euro zone government bond yields rose as the strong Chinese trade data boosted sentiment for riskier assets.

The investment-grade Markit iTraxx Europe index was at 66 basis points, according to data from Markit. That is 1.25 basis points tighter than late on Friday, according to data from BGC Partners.

Japanese markets were closed for the Coming of Age Day. (Additional reporting by Harpreet Bhal, Jessica Mortimer, George Matlock and Jane Baird in London; editing by Patrick Graham)

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