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GLOBAL MARKETS-Earnings in focus as stock rally continues

Published 01/14/2010, 08:16 AM

* Stocks up with earnings in focus

* Wall Street seen opening lower

* ECB keeps interest rates on hold

* Dollar slightly stronger, Aussie jumps

By Jeremy Gaunt, European Investment Correspondent

LONDON, Jan 14 (Reuters) - Investors moved past concerns about weakening demand from China on Thursday, generally upping their exposure to risk in bets on a global upturn that lifted stocks and the Australian dollar.

Corporate earnings remained clearly in focus, however, with Intel results due later in the day and JPMorgan on Friday. Wall Street looked set to open lower ahead of the results.

China rattled investors earlier in the week by tightening monetary policy, a move that set off concerns that one of the current engines of global economic growth could cool.

The concerns were short-lived, however, allowing investors to fall back into the risk-buying patterns that have generally carried over into 2010 from last year.

MSCI's all-country world stock index was up 0.3 percent for a roughly 3 percent gain this year on top of more than 31 percent last year.

The pan European FTSEurofirst 300 was up 0.4 percent. Japan's Nikkei closed up 1.6 percent at a 15-month closing high.

The immediate future of the rally may depend on some key corporate results.

"Earnings will be the most decisive factor during the next couple of weeks," said Koen De Leus, economist at KBC Securities.

"Everything now depends on the results of Intel and JPMorgan. If they are better-than-expected, then this rally can go on little bit further. If the results fail to impress, then we could see a correction."

The European Central Bank, as expected, left its currently loose interest rate policy. But there are here a number of concerns about the impact of indebted Greece on the euro zone.

The cost of insuring Greece's sovereign debt against default rose to a new record high of 334,800 euros per 10 million euros of exposure on Thursday, according to 5-year credit default swap prices from CMA DataVision.

Analysts in a Reuters poll say there is a one in five chance Greece will seek a financial bailout.

AUSSIE BOOST

After the ECB, the euro was slightly lower against the dollar at $1.4487,

The Australian dollar jumped early in Thursday's session after a solid Australian employment report triggered thoughts of higher interest rates, encouraging investors to pick up the higher-yielding currency and others like it.

The Australian dollar hit a two-month high of $0.9331, taking it closer to the 2009 high of $0.9407. It was later up half a percent at $0.9286.

Employment in Australia has now climbed 135,700 in the past four months to stand at 10.9 million. In the United States that would equate to an increase of around 1.6 million in non-farm payrolls, compared with the 347,000 jobs actually lost.

Euro zone government debt prices were slightly lower. (Additional reporting by Atul Prakash and Jessica Mortimer; Editing by Toby Chopra)

(To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub click on http://blogs.reuters.com/hedgehub)

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