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GLOBAL MARKETS-Strong Asian data boosts world stocks

Published 09/01/2010, 07:27 AM
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* MSCI world equity index up 0.3 percent at 279.99

* Data from China, Australia boost risk sentiment

* Oil rises; dollar, government bonds fall

By Natsuko Waki

LONDON, Sept 1 (Reuters) - World stocks started the month on a brighter note on Wednesday as data showed a manufacturing rebound in China and stronger-than-expected growth in Australia, while the yen held near recent 15-year peaks against the dollar.

China's manufacturing sector staged a moderate rebound in August after slowing for several months, while Australia's economy grew at the fastest pace in three years last quarter.

The strong readings from Asia helped offset concerns that the U.S. economy is slowing to an extent that would force the Federal Reserve to consider easing policy again.

"People are fixated on only two economies in the world: China and the U.S. It becomes a risk-on day if you get good Chinese data and a risk-off day if you get bad U.S. data," said Marc Ostwald, a strategist at Monument Securities in London. The MSCI world equity index rose 0.8 percent, moving further away from a seven-week low hit last week. The benchmark index is still down nearly 7 percent since January.

The Thomson Reuters global stock index rose 0.9 percent.

In Europe, the FTSEurofirst 300 index jumped 1.2 percent, led by mining shares such as Anglo American. U.S. stock futures rose around 1.2 percent, pointing to a firmer open on Wall Street later.

Emerging stocks added 0.8 percent while U.S. crude oil rose 0.7 percent to $72.46 a barrel. German government bond futures fell 66 ticks.

DOLLAR CANNOT WIN

The low-yielding dollar, which still tends to suffer when investors buy into riskier assets and currencies, lost 0.8 percent against a basket of major currencies.

The weaker outlook for the U.S. economy itself is also weighing on the dollar, with minutes of the Fed's Aug 10 meeting showing the central bank would consider additional easing steps if the outlook weakened "appreciably".

The meeting was held against a darkening backdrop, and the Fed, in a significant policy shift, decided to reinvest maturing mortgage-related securities in government debt so its support for the stumbling recovery did not fade.

"We've seen a reprieve for risk from the data overnight but I'm of the opinion you sell rallies in riskier currencies." said Kenneth Broux, markets strategist at Lloyds Banking Group.

"The market will keep buying safe havens such as the yen and the Swiss franc if U.S. data continues to disappoint."

The Japanese currency rose 0.2 percent to 84.03 per dollar, within half a yen of last week's 15-year high of 83.58. The euro gained 0.9 percent to $1.2797.

Manufacturing activity in the euro zone expanded for 11 months in a row although the pace of growth slowed, according to a Markit survey. (Additional reporting by William James; Editing by Hugh Lawson)

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