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GLOBAL MARKETS-World stocks rise, copper hits record highs

Published 02/14/2011, 02:13 PM
Updated 02/14/2011, 02:16 PM
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* Copper hits all time highs on Chinese demand

* MSCI world equity index up 0.3 pct at 342.63

* Euro hits 3-week low on WestLB woes; oil volatile (Adds copper market performance, comments, updates prices)

By Wanfeng Zhou

NEW YORK, Feb 14 (Reuters) - World stocks climbed towards last week's 30-month high and copper surged to all-time peaks on Monday after an unexpected jump in Chinese imports showed the country's strong appetite for raw materials.

The euro dropped to a three-week low of $1.3428 on trading platform EBS on concerns surrounding the fate of German lender WestLB. Rising bond yields for indebted euro zone economies added to worries about the single currency.

Copper for three-month delivery on the London Metal Exchange closed at $10,160 from $9,961 a tonne on Friday, after hitting a record high of $10,168.50 earlier. On New York's COMEX metals exchange, benchmark copper traded near record highs set last week.

Used extensively in the power and construction sectors, copper has surged more than 60 percent since last June. Robust demand from emerging nations and limited supply are seen as increasingly bullish for prices.

Preliminary Chinese trade data showed copper imports jumped a surprise 5.7 percent to 364,420 tonnes in January. For details, see [ID:nTOE71D037]

"The market's taken these numbers in a very bullish way," said Robin Bhar, an analyst at Credit Agricole. "China's appetite is insatiable."

Talk of slower-than-expected Chinese inflation also helped revive investors' risk appetite and boost stock and commodity prices in general.

But analysts cautioned against concluding that Beijing would waver in its campaign to tighten policy further, given the continued increases in global commodity prices and the still-ample pool of excess cash in the economy.

The MSCI world equity index <.MIWD00000PUS> rose 0.4 percent, having hit its highest level since August 2008 last week. Thomson Reuters' global stock index <.TRXFLDGLPU> gained 0.5 percent.

In the United States, the S&P and Nasdaq <.IXIC> <.SPX>ticked higher, though persistently below-average volume suggested that investor enthusiasm was waning after gains carried stocks to 2 1/2-year highs last week.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed 0.3 percent higher at 1,177.86 points, its highest close since early September 2008. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

China's trade surplus http://link.reuters.com/weh97r

GDP of G3 economies http://link.reuters.com/dac97r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

WESTLB WOES

German financial regulator BaFin is involved in talks about the restructuring of WestLB as the bank struggles to come up with a rescue deal, sources told Reuters. [ID:nBAT005995]

European finance ministers assessed ways of strengthening their 440 billion euro rescue fund on Monday, but Germany remained reluctant to bolster the facility known as the EFSF without commitments on closer economic coordination.

"We have some serious questions over what's going to happen with the EU meeting this week and whether or not they will come to any kind of conclusion on the EFSF," said Andrew Busch, global currency and public policy strategist at BMO Capital Markets in Chicago.

Weakness in the euro helped push the U.S. dollar index, which measures the greenback versus a basket of major currencies, to a three-week high of 78.873 <.DXY>.

Financial markets showed a muted reaction to President Barack Obama's budget proposal that would cut the U.S. deficit by $1.1 trillion over 10 years and set the stage for a bitter fight with Republicans who want tougher spending controls. See [ID:nWALEDE70C]

U.S. crude oil fell back to negative territory after earlier rising above $86 a barrel, pressured by high domestic inventories and as the dollar strengthened. Concerns about political uncertainty in the Middle East pushed prices of safe-haven gold higher.

U.S. Treasury prices were little changed with benchmark yields holding below recent highs as investors awaited data later in the week to gauge the state of the economy and how far yields may need to rise to account for growth.

Emerging stocks <.MSCIEF> added 1.4 percent measured by the Morgan Stanley Capital index. Shanghai stocks <.SSEC> hit an eight-week high, scoring the index's biggest single-day percentage gain since mid-December. (Additional reporting Julie Haviv in New York and Natsuko Waki in London; Editing by Andrew Hay)

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