ECB outlook lifts Europe shares, Australian dollar sags

[November 26, 2014]  By Emelia Sithole-Matarise

TOKYO (Reuters) - European shares pushed higher on Wednesday, bolstered by the prospect of more stimulus from the European Central Bank and as upbeat U.S. economic growth data calmed investor anxiety over a deteriorating global outlook.

The Australian dollar hit a four-year low against its U.S. counterpart ahead of a clutch of further U.S. data likely to prove crucial for this week's recovery of a handful of currencies against the dollar.

The pan-European FTSEurofirst index of leading blue-chip companies <.FTEU3> has been rising daily since ECB President Mario Draghi opened the door to more aggressive asset purchases and China cut interest rates on Friday.

The index was up 0.3 percent at 1,393.37, with investors also encouraged by an upgrade of U.S. third quarter gross domestic product to 3.9 percent on Tuesday from 3.5 percent reported last month. Economists polled by Reuters had expected growth would be cut to 3.3 percent.

"Sentiment is bullish," Markus Huber, a senior trader at Peregrine & Black, said. "We're long the DAX (German share index) because America has outperformed hugely and even though growth there is strong that is already in the price whereas in Germany there's more to come."

AUSSIE SLUMP

The Australian dollar slumped to a four-year low of U.S. $0.8510 <AUD=D4>, deepening this week's losses against the greenback.

The Australian currency has been one of the biggest casualties in a rally for the U.S. currency since July and Reserve Bank of Australia Deputy Governor Philip Lowe this week propelled it to as low as $0.8514 on Tuesday by saying it was still overvalued.

"There are those who say the Aussie should bounce from these levels but my feeling is if it breaks below (a key support) against the kiwi that may be significant," said Daragh Maher, a strategist with HSBC in London.

The 10-year U.S. Treasuries yield dropped to a one-month low of 2.252 percent, as strong auction results, month-end buying and an unexpected drop in U.S. consumer confidence offset the encouraging GDP news.

That also helped the U.S. dollar pull further away from a seven-year high against the yen as investors took profits from its rally ahead of the Thanksgiving Day holiday on Thursday.

The dollar was down 0.2 percent at 117.72 yen, retreating further a seven-year high of 118.98 reached the previous week. The euro was little changed at $1.2477.

Oil prices steadied around $78 a barrel after a comment by Saudi Arabia's oil minister that the oil market would stabilise eased pressure on the market before an OPEC meeting on Thursday.

Benchmark Brent futures were at $78.15 a barrel at 0900 GMT, off a low of $78 hit earlier in the day after a meeting of Saudi Arabia and three other nations ahead of Thursday's summit ended with no deal to curb output. Predictions for the OPEC summit range from a large output cut to none at all.

(Additional reporting by Francesco Canepa and Patrick Graham; Editing by Toby Chopra)

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