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 The pick-up in risk sentiment combined with the dip in the dollar
gave commodities a brief reprieve from recent selling, with oil,
copper and other industrial metals and gold up for a while before
losing their traction.
European stocks also performed strongly with the FTSEurofirst 300
pushed to a three-month high by 0.8 to 1.6 percent gains in London,
Frankfurt and Paris, after Japan's Nikkei had hit a similar
peak in Asia. [.T]
Minutes of the Fed's last policy meeting showed most members were
ready to sanction the bank's first rise in rates in almost a decade
in December as long as further moves then depended on the economy
continuing to perform well.
It was a cautious enough message to ease any concerns that the U.S.
central bank might over eager with its rate rises and torpedo what
is already relatively lackluster growth in the world's largest
economy.
"We have had an interesting FOMC minutes and risk assets have
rallied across the board with the dollar weaker and EM leading the
way," said Alvin Tax an FX strategist at Societe Generale in London.
"That is the success of the Fed really. We expect they will hike in
December but then proceed slowly after that and that has soothed
markets."
Futures prices pointed to Wall Street's main S&P 500, Dow Jones
Industrial and Nasdaq markets adding around 0.4 percent to the sharp
1.4 - 1.6 percent gains they had made on Wednesday.
The earlier leaps across Asia meant MSCI's benchmark emerging market
share index, which is up 10 percent since late August, was on course
for its best day in a month and the 45-country All World equivalent
was up for a fourth straight day.
Bond markets also seemed to have got the message that there was be
no post-December rush on rates from the Fed.
Longer-term debt outperformed and the yield curve flattened
noticeably. While two-year yields rose 3 basis points, those on
30-year paper actually dipped a basis point.
Yields were lower across most of Europe and Asia too. The premium
offered by U.S. two-year debt over its German counterpart yawned out
to 124 basis points, the fattest margin since 2006 and a positive
for the dollar.
However, being long dollars has been a very crowded trade and
investors decided to book some profits in the wake of the Fed
minutes. Against a basket of currencies the dollar dipped 0.5
percent and away from a seven-month peak.
The euro edged back above $1.07 and off a seven-month trough
around $1.0615. The dollar also eased against the yen to 123.09,
after touching a three-month peak of 123.67.
COMMODITY RELIEF
U.S. traders were readying themselves for what is expected to be a
minor fall in jobless claims figures due at 8:30 a.m. ET as well as
speeches from heavyweight Fed members, Vice Chair Stanley Fischer
and Atlanta Fed President Dennis Lockhart.
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Minutes of the European Central Bank's last policy meeting
reinforced expectations of further easing from Frankfurt next month
just as the Fed is gearing up to raise U.S. interest rates.
Peter Praet, the ECB's chief economist, also kept up the speculation
that the bank's 'deposit rate' could go even deeper into negative
territory, saying in a speech that the so-called "zero lower bound"
was lower than most experts had originally thought.
In Asia overnight, the Bank of Japan surprised no one at its regular
policy meeting by maintaining the current pace of asset buying,
though many still suspect it will have to ease again at some point
to force inflation higher.
Tokyo's Nikkei firmed 1 percent, brushing aside a disappointing
report on exports and imports, while MSCI's broadest index of
Asia-Pacific shares outside Japan rose 2 percent led by Australia.
After a slow start, Chinese markets caught the better mood and the
CSI300 index of the largest listed companies in Shanghai and
Shenzhen added 1.6 percent.
In commodity markets, gold added 0.6 percent to $1,077.20 an ounce
having been at its lowest since early 2010. Zinc, copper, lead and
nickel were all near their lowest in five to seven years.
Oil prices rose from three-month lows on short-covering but began to
slip back again ahead of U.S. trading. U.S. crude was a shade lower
at $40.40 a barrel with Brent at $44.08. [O/R]
"People are seeing oil at these very low levels and so they want to
step in," said Hans van Cleef, senior energy economist at ABN Amro
in Amsterdam. "But the oversupply is capping gains."
(Reporting by Marc Jones; Editing by Toby Chopra)
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