As well as the encouraging economic data, which helped take some
of the sting out of Thursday's disappointing U.S. retail and
unemployment figures, investors gave a cautious thumbs up to the
latest changeover at the summit of Italian politics.
Stocks in Milan were Europe's best performers by some distance,
rising 1.1 percent versus a 0.4 percent higher pan-European
FTSEurofirst 300 index. In the debt market, Italian borrowing costs
hovered near 8-year lows.
Italian center-left leader Matteo Renzi forced party rival Enrico
Letta to resign as prime minister on Thursday after criticizing his
government's failure to pass major reforms.
That means the country faces its third administration in a year, but
the hope is the youthful, sharp-talking Renzi can breathe new life
into efforts to streamline the euro zone's third largest economy.
"The appointment of Renzi is seen as something positive. He is a new
politician who can take decisive action," BNP Paribas rate
strategist Patrick Jacq said.
"This is not political uncertainty. In fact, the political situation
in Italy now is clearer."
In the currency market, the euro traded at just under $1.37, within
touching distance of a three-week high hit earlier in Asia.
Euro zone growth and the positive sentiment towards Italy helped its
cause, although a softening dollar on the back of Thursday's
lackluster data had an equal effect.
The mood was buoyed as fourth quarter economic growth in Germany and
France marginally exceeded expectations and offered hope of a more
The euro zone-wide number is due at 1000 GMT and forecast to show
quarterly growth of 0.2 percent, though given the performance of the
bloc's top two economies, it may well exceed those bets.
"It (GDP data) will confirm there is a recovery in train in the euro
zone which if you are an equity investor should at the margin
bolster your confidence that the improvement is for real and
sustainable," said Macquarie Capital strategist Daniel McCormack.
Early futures prices pointed to subdued end to the week for Wall
Street though it, like European shares and MSCI's 45-country world
index, was on course for its best week since the end of December.
Data from both the U.S. and China have been unconvincing recently
but the wobbles have been offset by assurances from the Federal
Reserve, European Central Bank and Bank of England that their
supportive policies will remain in place if needed.
In Asian trading, share markets mostly rose to give MSCI's broadest
index of Asia-Pacific shares outside Japan its biggest weekly gain
[to top of second column]
Japan's Nikkei stock average underperformed its counterparts though,
tumbling 1.5 percent for its sixth straight weekly losses as the yen
continued to make ground against the weaker dollar.
"Japanese stocks have trouble advancing as overseas investors have
become reticent," said Kenichi Hirano, a strategist at Tachibana
Securities in Tokyo.
The weaker dollar helped point Asian emerging market currencies
towards weekly gains as they continued to recover ground after last
The Indonesian rupiah hit a near 11-week high after data showed that
country's current account deficit narrowed sharply in the fourth
quarter, though both the Russian rouble and Nigerian Naira remained
The yield on benchmark 10-year Treasury notes dipped after
Thursday's data but climbed back to just under 2.74 percent in early
European trade, pulling benchmark European German Bund yields in its
U.S. yields rallied this week after the U.S. Congress approved an
increase in the debt limit and incoming Federal Reserve Chair Janet
Yellen maintained the central bank's commitment to gradually
withdraw its stimulus.
In commodities trading, U.S. crude slipped about 0.2 percent to
$100.13 a barrel after skidding on the previous session's dismal
U.S. data. Brent crude also edged down about 0.1 percent to $108.40.
Spot gold added about 0.3 percent in Asian trading to $1,306.90 an
ounce, after hitting a three-month high of $1,307.80 earlier in the
The U.S. data gave gold futures a lift and helped them post their
eighth straight gaining session — the longest winning streak since
(Additional reporting by Marius Zaharia in London and Lisa Twaronite
in Tokyo; editing by John Stonestreet)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.