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China deal sends shares to one-month high, ruble surges

Published 11/10/2014, 04:53 AM
© Reuters A pedestrian walks past an electronic board showing the Japan's Nikkei average outside a brokerage in Tokyo
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By Marc Jones LONDON (Reuters) - A landmark deal to give global investors easier access to China's $3.9 trillion stock market lifted world shares to their highest in over a month on Monday, as tensions in Libya and Ukraine pushed up oil prices.

Chinese shares jumped 2.5 percent and Hong Kong's Hang Seng index (HSI) climbed almost 1 percent after the two exchanges announced a November 17 start date for their long-awaited tie-up.

European markets also got off to positive start amid more M&A activity and encouraging results from brewer Carlsberg (FTEU3), pushing the 45-country MSCI All World index, (MIWD00000PUS) to its highest since late September.

In the currency market, the dollar (DXY) made a poor start to the week, with some traders still using mixed U.S. jobs numbers on Friday to lock in recent gains. The Swiss franc (EURCHF=) was also in focus as it nudged the Swiss National Bank's 1.20 ceiling against the under-pressure euro.

"The dollar has had a good run of late and those who have been short euro dollar for example have just taken this chance (to take stock)," said Geoffrey Yu, a strategist with UBS in London.

Europe's bond markets were feeling the benefit of Friday's rally in U.S. government bonds (US10YT=RR) after the jobs data.

Even Spanish bond yields dipped <ES10YT=TWEB> despite millions of Catalans voting over the weekend in a non-legally binding referendum on independence from the rest of Spain.

The dollar's fall also lifted the battered gold price from 4 1/2-year lows. Gold traded at $1,172.50 per ounce <XAU/USD>, above Friday's low of $1,131.85 though the rebound in the yen against the dollar pushed down Japanese stocks on the Nikkei (N225).

Oil prices rose on renewed political tensions in the Middle East and Ukraine, with Brent crude gaining 0.6 percent, extending its recovery from a four-year low hit last Wednesday.

Fierce fighting between Iraqi military forces and Islamic State insurgents, the third Libyan oil field closure in a week and shelling in the pro-Russian stronghold of Donetsk in eastern Ukraine were all factors in the move.

There was no sign that recent volatility in Russia's ruble was about to let up as, after dabbling with the idea last week, Russia's central bank formally abolished structured currency market interventions.

Shortly before the announcement, President Vladimir Putin had said there were no reasons for the slide in the Russian currency.

© Reuters. Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange

After a dramatic fall in the previous week and volatile swings of 6 percent in its rate on Friday, the ruble was last up almost 3 percent at 45.32 to the dollar <RUBUTSTN=MCX>.

(Additional reporting by Hideyuki Sano in Tokyo, editing by John Stonestreet)

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