Oil bounces, world stocks
hold near all-time highs
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[May 11, 2017]
(Reuters) - World stocks held near all-time highs on Thursday, helped by
a rebound in energy shares as oil prices rose after U.S. fuel
inventories declined and Saudi Arabia cut supplies of crude to Asia more
MSCI's gauge of global stock markets was up 0.1 percent, bringing their
gains for the year to nearly 10 percent.
European shares underperformed as investors looked to lock in gains
after their strong run so far this year. Government bond yields rose as
rising oil prices reinforced expectations inflation would pick up.
Signs that prices would rise might encourage the European Central Bank
to step back from its ultra-loose monetary policy in coming months.
Those expectations also underpinned the euro, which rose 0.2 percent
against the dollar to $1.0883.
Sterling hovered below its seven-month highs against the dollar before a
Bank of England interest rate decision and inflation report due later in
the day. No change is expected in bank policies.
Oil prices stood out in an otherwise relatively quiet day across
Brent crude rose another 1.3 percent following a 3 percent gain in the
previous session. The advance helped Brent regain the $50 level and
reverse all of last week's losses.
"We saw the biggest draw in (U.S.) inventories for the year last week
with stockpiles down more than 5 million barrels, and it looks like
OPEC's production cut is finally biting," said Greg McKenna, chief
market strategist at brokerage AxiTrader.
The Organization of the Petroleum Exporting Countries and other
producers, including Russia, have agreed to cut output by almost 1.8
million barrels per day during the first half of the year to try to
reduce a global fuel glut.
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People are seen behind an electronic board showing stock prices at
the Tokyo Stock Exchange (TSE) in Tokyo, Japan, January 4, 2017.
The dollar weakened against a basket of major currencies, though most
major currency pairs were all holding in tight ranges.
Earlier in the Asian day, the New Zealand dollar sank as much as 1.5
percent after the country's central bank stuck with a neutral bias on
policy, warning markets they were reading the outlook wrong and
expressing approval of the currency's declines this year.
The U.S. dollar came under pressure after U.S. President Donald Trump's
abrupt dismissal of FBI Director James Comey raised fears that political
turmoil would derail U.S. stimulus steps and tax reform.
But with markets pricing in around a 90 percent chance that the economy
is strong enough for the Federal Reserve to raise interest rates at its
meeting next month, investors did not lose sight of fundamentals.
(Additional reporting by Christopher Johnson, editing by Larry King)
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