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 Economic indicators in most regions are pointing to a pick-up in
production and offering support to equities despite stretched
valuations.
Risk appetite has also been whetted by dovish central bank monetary
policy, with the lack of rate hike hints from the Federal Reserve
keeping the dollar stuck near two-month lows.
The MSCI World Index, which tracks stocks from developed economies,
rose 0.2 percent, to 1,757.84 points, close to all-time highs.
The pan-European FTSEurofirst 300 equity index was up 0.4 percent at
1107 GMT, while German bund futures were trading broadly flat.
France bucked the broadly positive trend in Europe, with the
blue-chip CAC 40 index dragged down by telecoms groups after Orange
said it had ditched plans to take part in any domestic tie-ups.
"Investors are making only slight position adjustments," said Nick
Beecroft, analyst at Saxo Bank. "The low volatility environment is
spooky and slightly unnerving. "Economists awaited the European
Central Bank policy meeting on Thursday for more guidance after
fresh data showed that falling energy costs depressed euro-zone
industrial prices in May, marking the fifth consecutive monthly fall
and underlining the low inflation that is plaguing the single
currency bloc.
Industry data in Britain, meanwhile, showed a surge in home-building
helped construction activity there to grow at its fastest annual
pace in four months in June, bucking expectations for a slowdown.
Investors also focused on the ADP private-sector survey due at 1215
GMT along with a speech from U.S. Federal Reserve head Janet Yellen
at 1500 GMT. Her recent dovish bias, especially after the latest Fed
meeting, has been a major factor that has led investors to cut
favorable positions in the dollar. "At the time Yellen seemed
determined to give as little support as possible to rate hike
speculation," said Esther Reichelt, currency strategist at
Commerzbank. "This is unlikely to be any different today. But the
market is waiting for Fed signals and therefore already small hints
can be sufficient to affect the dollar."
The dollar index was slightly higher at 79.864, compared with a low
of 79.740 struck on Tuesday.
EMERGING APPETITE
Risk appetite was broadly positive globally, even though Brent crude
oil steadied around $112 a barrel as fighting in Iraq heightened
concerns over the country's oil production.
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The MSCI emerging markets index outperformed with a gain of 0.9
percent.
Middle East and North African markets were jumpier: Cairo's EGX
index fell 0.5 percent after Egypt's president approved a law on
Tuesday imposing new taxes on capital gains and stock dividends, as
the government seeks to revive an economy battered by years of
political turmoil.
However, Dubai's main index rose 8 percent, with builder Arabtec
surging before a briefing on management issues later in the day.
South African stocks gained after the head of the striking NUMSA
union said on Wednesday wage talks with an employers group would
resume on Thursday night after more than 200,000 workers in the
engineering and metals industry downed tools on Tuesday.
Overnight, Asian stocks had scored a three-year peak after a round
of upbeat global economic data whetted risk appetites and helped
Wall Street taste all-time highs.
Dealers said fund managers were rotating money out of bonds and into
equities for the start of the second half of the year, nudging up
U.S. Treasury yields.
At the same time, the outlook for super-low rates in the major
economies and an almost eerie absence of volatility across markets,
encouraged investors to take on leveraged bets in search of higher
returns - the so-called carry trade.
(Reporting by Lionel Laurent; Additional reporting by Anirban Nag
and Alistair Smout; Editing by Toby Chopra)
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