shares at two-month high, oil flat ahead of OPEC
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[November 25, 2014]
By Marc Jones
LONDON (Reuters) - Bets on more central
bank support kept European shares at a two-month high and the region's
bond yields at record lows on Tuesday, as oil prices hovered at just
under $80 a barrel ahead of an OPEC meeting this week.
Markets were still trying to catch their breath after a hectic few
days of sharp share rises, currency swings and new lows for euro
zone bond yields following strong easing signals from ECB head Mario
Draghi and a surprise Chinese rate cut.
Asian stocks had dipped despite another record high for Wall Street
overnight, and Europe's bourses also saw a subdued start with
Britain's FTSE 100, Germany's DAX and France's CAC 40 all barely
budged in early trading.
Euro zone government bond yields also held at record lows and the
euro pottered in a $1.2430-40 range with financial markets lulled by
European Central Bank President Draghi's vow to lift inflation by
whatever means necessary. [GVD/EUR]
"We have had fresh signs of easy money coming from China and strong
signals from Mario Draghi and the ECB and that is what driving
markets at the moment," said Kerry Craig a global markets strategist
at JP Morgan.
"There are real risks of recession and deflation, but there are also
reasons to believe that 2015 will be a better year for the euro zone
than this year has been."
German data showed a rise in private consumption helped its economy
- Europe's biggest - avoid recession last quarter, while France saw
a better-than-expected rise in business morale.
"These results go in the right direction, they must now be
consolidated in the coming months," said French Finance Minister
Among the region's central bankers, the debate over further easing
appears to be continuing. France's ECB member Christian Noyer said
in Tokyo the central bank's statements about boosting its balance
sheet by around 1 trillion euros were an expectation rather than a
That followed Bundesbank chief Jens Weidmann's warning on Monday
that government bond buying, which economists hope would boost the
euro zone economy, would face legal hurdles.
The yen rose after Bank of Japan minutes showed the hurdle to
further quantitative easing was high as the dollar struggled to make
much headway before a second reading of U.S. growth data later.
Australia's dollar, in contrast, hit a four-year low after Reserve
Bank of Australia (RBA) Deputy Governor Philip Lowe said the
currency was overvalued and he expected it to fall.
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Oil prices remained the other key focus for financial markets as
they held at just under $80 a barrel.
They have fallen almost 30 percent since the middle of the year and
pressure is on the Organization of the Petroleum Exporting Countries
(OPEC) ahead of what is shaping up to be a landmark meeting in
Vienna on Thursday. [O/R]
"The reduced leverage that OPEC now has over the oil market is
likely to make it more cautious about cutting production,"
strategists at Barclays said in a note.
"The rapid growth being achieved in non-OPEC production means it
faces the risk that even a large cut to supply may not be enough to
support prices and could simply result in lost market share and
revenue," they added.
Russia, which needs higher oil prices to support its economy, tried
to sway OPEC to slash production, suggesting Moscow could cut its
own crude output.
With oil holding steady again, the bruised rouble extended its
rebound to a fifth straight day, though the dollar-based RTS stock
index dropped 1.7 percent and the rouble-based MICEX was down 0.6
Safe-haven gold meanwhile nudged up to $1,200 an ounce after small
losses in the previous session, as traders eyed the dollar and a
Nov. 30 Swiss referendum on central bank gold reserves.
(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Hugh
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