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 After a dismal summer, which saw the worst quarter for global
equities since 2011, traders say fund managers are ready to pile
back in, hoping the recent market reversal was a hiccup rather than
the end of a six-year bull market.
Mining and energy shares were the big winners in Europe, up 2 to 4
percent. Emerging-market stocks <.MSCIEF> also rose 2 percent, to
their highest level since mid-August, although tourism and airlines
stocks lost ground, on the prospect of a squeeze on profits from
higher input costs.
Asian shares reached a seven-week high. South Korea's Samsung
Electronics <005930.SS> improved sentiment when it issued a
better-than-expected profit guidance.
All that left global equities <.WORLD> set for their sixth straight
day of gains.
The heart of the rally was a jump of more than $1 for U.S. crude oil
<CLc1> to $49.64 per barrel. However, the gain was largely driven by
evidence of tighter supply and dwindling inventories after two years
of heavy surplus and a collapse in commodity prices.
 In fact, there was little reason for more optimism on the underlying
economy on Wednesday. Data showed German industrial output fell in
August at its fastest pace in a year and growth in Spanish output
slowed. British retails prices dropped more in September than they
had in August, according to the British Retail Consortium.
Although the Bank of Japan held off on expanding monetary stimulus
on Wednesday, expectations of more support rather than less is
growing, as worries mount over a global economic slowdown. This
week, the International Monetary Fund cut its forecast for growth
again.
"The sense is that interest rates are not going to rise in the
foreseeable future," said Deutsche Bank Managing Director Nick
Lawson, adding that after a rough September investors were ready to
put more firepower into rebound bets.
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"The market is proving its addiction to QE (quantitative easing)."
Investors have scaled back expectations the Federal Reserve will
raise interest rates this year after surprisingly weak U.S. jobs
data on Friday. Worries over the American economy grew after the
largest expansion of the U.S. trade deficit in five months.
Beaten-up emerging markets, meanwhile, got a lift to their
currencies amid the rally. The Indonesian rupiah <IDR=ID> surged 2.3
percent on Wednesday, taking its gains so far this week to over five
percent. The Malaysian ringgit MYR= also jumped 2.4 percent.
The New Zealand dollar <NZD=D4> popped to a seven-week high on a
solid rise in dairy prices. The Australian dollar hit a two-week
high AUD= of $0.7188 while the Canadian dollar firmed to C$1.3026,
nearing its September peak of C$1.3013.
The euro traded at $1.1267 EUR=, near this week's high of $1.12895,
before falling back to $1.1242. The dollar's index against six major
currencies <.DXY> picked up slightly after falling to 95.327, its
lowest level this week and near Friday's low of 95.218.
(Reporting by Lionel Laurent; Additional reporting by Anirban Nag
and Lisa Barrington; Editing by Larry King)
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