shares drop, oil jumps on Goldman view
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[May 16, 2016]
By Nigel Stephenson
LONDON (Reuters) - European shares fell in
subdued, holiday-squeezed trade on Monday, unable to maintain the
momentum of Asian stocks that shrugged off sub-par Chinese economic data
to eke out modest gains.
Wall Street appeared set to open flat to marginally higher,
according to index futures.
The yen fell against the dollar, helping Tokyo stocks higher, while
Irish government bonds outperformed other euro zone sovereign debt,
pushing borrowing costs to a one-month low after the once bailed-out
country regained its third investment grade credit rating over the
Oil prices jumped more than 2 percent to their highest since
November, partly after Goldman Sachs, one of the most bearish
forecasters on oil over the past year, raised its short-term price
outlook due to the effects of production outages. [O/R]
The pan-European FTSEurofirst 300 share index fell 0.5 percent.
Volume was constrained with the Frankfurt Stock Exchange among
Europeans bourses closed for a holiday. Britain's FTSE 100 dipped
The FTSEurofirst rose 0.6 percent on Friday after U.S. retail sales
recorded their biggest monthly rise in a year.
Data from China over the weekend was less rosy. April's retail
sales, factory output and fixed-asset investment all fell short of
forecasts by economists polled by Reuters.
The numbers were not enough to prevent Chinese shares rising on
Monday, however. The blue-chip CSI300 index closed up 0.7 percent
and the Shanghai Composite 0.8 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4
percent. Hong Kong's Hang Seng added 0.8 percent and Australian
stocks rose 0.6 percent.
Tokyo's Nikkei climbed 0.3 percent on prospects of more fiscal
stimulus and on a weaker yen. Prime Minister Shinzo Abe told
parliament a majority of Group of Seven leaders agreed more stimulus
was needed to boost global demand.
The yen edged down 0.2 percent to 108.87 per dollar and the
euro rose 0.1 percent to $1.1319. The dollar was flat against
a basket of major currencies, having touched a three-week high on
"We suspect that Japan will get a lot of private support (from G7
members) for increasing quantitative easing," said Greg Anderson,
global head of strategy at BMO Capital Markets.
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IRISH BONDS IN FAVOR
In euro zone government bond markets, German 10-year yields
rose 0.6 basis points to 0.13 percent. Irish yields, however, fell
2.3 bps to 0.8 percent after Moody's Investor Services raised its
credit rating to A3 from Baa1. It maintained a positive outlook on
Ireland, which entered a three-year international bailout in 2011.
"The upgrade by Moody's expands the range of potential buyers of
Irish bonds. Some investors, particularly in Asia require a minimum
'A' grade from all of the three big agencies," Cantor Fitzgerald
strategist Ryan McGrath said.
Oil prices rose more than 2 percent after Goldman Sachs said
disruption to supply had seen the market flip into deficit. It said
U.S. crude could trade as high as $50 per barrel in the second half
of 2016 although it cautioned the market would return to surplus in
the first half of next year.
Brent crude hit $48.90 per barrel, its highest price since November.
The international benchmark, which has risen nearly 80 percent from
lows touched in January, last traded at $48.80, up 97 cents on the
The dollar's relative weakness helped lift copper prices. The metal
rose 0.4 percent to $4,64 per ton, having hit a 2-1/2-month low on
Gold rose 0.7 percent to $1,282 an ounce.
(Additional reporting by Shinichi Saoshiro in Tokyo, Anirban Nag and
John Geddie in London; editing by John Stonestreet)
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