Shares near 6-yr high, euro firm after inflation rebound

Nov 29 2013, 21:10 IST
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World stocks hovered around a six-year high as faith in an improving global economy and support from central banks drove markets towards a third straight month of gains. Reuters World stocks hovered around a six-year high as faith in an improving global economy and support from central banks drove markets towards a third straight month of gains. Reuters
SummaryEuropean shares were near a 5-1/2 year high and heading for a seventh week in positive territory.

back up against the yen having dropped from a new five-year high of 139.705 yen overnight. Investors have been using the yen as a funding currency for carry trades with the Bank of Japan committed to keeping ultra-loose monetary policy to shore up growth - in contrast to the U.S. Federal Reserve which is moving towards unwinding its $85 billion-a-month bond-buying campaign.

The yen is down almost 18 percent versus the euro this year, while it is off 15 percent against the greenback - and is also set for its biggest one-month fall since January. The Nikkei meanwhile, has rallied 50 percent this year.

Data on Friday showed Japanese consumer inflation accelerated to a five-year high and factory output rose for a second straight month in October, more evidence the recovery in the world's third-largest economy should extend into 2014. "Industrial production was good but it was below consensus. Gradually, the market is coming to believe the BOJ will be forced to react again sometime next year," said Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas in Tokyo.

GOLD WEIGHS

Among commodities, oil held near $111 on course for its biggest monthly rise since August, while growth-attuned metal copper limped to a 3 percent monthly fall.

Gold was also licking its wounds at $1,247 an ounce after its biggest monthly drop since June took its year-to-date slump to more than a quarter of its January value.

It is a fall that is being driven by worries over the U.S. central bank, the Federal Reserve, eventually scaling back its huge, $85 billion a month stimulus programme.

Emerging market currencies and stocks have also been in the firing line and Indonesia's central bank mirrored a move by Thailand earlier in the week as it intervened on Friday to lift the rupiah away from a near five-year low.

Due to Indonesia's sizable current account deficit, the rupiah is regarded as the Asian currency most vulnerable to capital outflows once the Fed finally starts cutting its aid.

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