Global stocks rise, Brent crude hits four-year low

[November 11, 2014]  By Nigel Stephenson

LONDON (Reuters) - Global stocks and the dollar rose on Tuesday as investors weighed the prospect of further stimulus to aid the recovery of the global economy.

European shares were lifted by upbeat corporate updates while Tokyo's Nikkei index hit a seven-year high on talk that a Japanese sales tax increase may be delayed.

Wall Street, where the Dow and S&P 500 notched up their fourth consecutive record closing highs on Monday, were set to open with further gains.

A 2.1 percent rise in Tokyo helped push the yen lower versus the dollar. The greenback hit a seven-year high against the Japanese currency as it recovered from losses made after Friday's below-forecast U.S. payrolls data.

Oil prices fell further, with Brent crude dropping to a four-year low below $82 a barrel.

European shares were boosted by positive updates from companies including Germany's Henkel and Hochtief. The pan-European FTSEurofirst 300 index  rose 0.4 percent.

"So far German results have been slightly better than expected," said Gregor Kuhn, an analyst at IG.
 

"Expectations had been downgraded before the reporting season and Russia was one of the reasons. The other one was economic weakness in the euro zone, but I think that is priced in by now."

The Nikkei share average hit its highest close since October 2007 on speculation that Prime Minister Shinzo Abe might postpone a sales tax increase planned for next October and call a snap election.

An April hike in the tax by 3 percentage points chilled consumption in the second quarter, driving the world's third largest economy into its sharpest slowdown since the global financial crisis.

JAPANESE GROWTH

"You just can't come up with a scenario of a victory by the opposition. So this means Abe will have four more years to go," said Norihiro Fujito, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.

"Both fiscal and monetary policies will be supporting growth in the near future. And today markets started to price that in."

Elsewhere, MSCI's main index of Asia-Pacific shares excluding Japan fell 0.3 percent.

Yields on lower-rated Spanish and Italian government bonds fell after European Central Bank Executive Board member Yves Mersch said on Monday that the "critical" state of the euro zone economy made ECB purchases of government debt possible.

HIGH EXPECTATIONS

While Friday's U.S. jobs data missed high expectations and pushed the dollar down, analysts said it underscored the economy's resilience in the face of slowing global demand.

A rise in U.S. Treasury yields on Monday lifted the dollar broadly and in European trade it hit a fresh seven-year high of 116.11 yen on the EBS trading system.

The euro was a shade weaker at $1.2419, not far from a two-year low of $1.2358 hit on Friday.

Brent crude oil  fell $1.11 to a four-year low of $81.23 a barrel and was last just below $82. It has lost nearly 30 percent since June, partly due to rising production, especially in the United States.

Spot gold was steady around $1,150 an ounce.

(Additional reporting by Lisa Twaronite and Shinichi Saoshiro in Tokyo, Ian Chua in Sydney and Francesco Canepa in London; Editing by Dominic Evans)

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