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 Asian stocks hit a two-month high, Japan's and China's main indices
both rose more than 4 percent, and European markets were still in
positive territory, putting them on track for their longest winning
streak in five months.
Investors shrugged off further signs of weakness in global
manufacturing, taking their cue instead from more encouraging
indicators, such as U.S. construction spending and Australian and
Swiss GDP.
Stocks and investor confidence rose even though expectations rose
that the Federal Reserve will raise interest rates later this year
<0#FF:>, something that hasn't been in evidence much in recent
weeks.
"Markets are definitely in a period where good news equals good
news, with no immediate concern about what it might mean for, say,
Fed expectations," said Jim Reid, market strategist at Deutsche Bank
in London.
The FTSEuroFirst index of leading 300 shares was up 0.2 percent at
1,335 points, on track for its fifth straight day of gains but off
its earlier highs.
Germany's DAX and France's CAC were both up 0.2 percent too.
Britain's FTSE 100 was down 0.3 percent.
Investors also took heart from announcements by China earlier this
week of a cut in bank reserve requirements and structural reforms to
the world's second-largest economy.
Japan's Nikkei closed up 4 percent, Hong Kong's HangSeng Index rose
3 percent and China's main markets had their best day so far this
year, rising more than 4 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 2.5
percent to its highest levels since Jan. 7, and building on gains in
the previous session.
MSCI's broadest gauge of the world's stock markets also rose to
highest level in almost two months.
STIMULUS HOPES
The Institute for Supply Management's index of U.S. factory
activity, a closely watched measure of American manufacturing, rose
more than expected last month. It also edged up for two months in a
row, apparently ending its almost continuous decline since late
2014.
U.S. construction spending rose to its highest since October 2007
and solid GDP data from Canada and Australia and Switzerland on
Wednesday helped.
The data helped lift the U.S. S&P 500 Index 2.39 percent to an
eight-week high of 1,978.35. Stock futures pointed to a lower open
on Wall Street.
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Even Moody's downgrade of its outlook on Chinese government debt to
"negative" from "stable" failed to puncture the renewed sense of
cautious optimism.
If anything, investors are taking heart from the prospect of more
stimulus from Beijing in the coming weeks, as well as the European
Central Bank as early as next week.
"The countdown to the ECB meeting begins and the poor inflation and
core inflation numbers from the euro zone points to more easing from
(ECB president) Mario Draghi," said David Madden, market analyst at
IG in London.
Investors unwound bets in safe-haven assets such as government
bonds, with the 10-year U.S. Treasuries yield rising to a four-week
high of 1.85 percent.
The 10-year German Bund yield rose nearly 5 basis points to 0.20
percent, although Germany auctioned five-year bonds at a record low
yield of -0.36 percent .
Gold slipped from its recent high to $1,230 an ounce but is still up
16 percent so far this year. Similarly, oil eased back on Wednesday
but is till up more than 30 percent from its lows struck just three
weeks ago.
Brent crude futures fell 1 percent to $36.48 a barrel, after hitting
an eight-week high of $37.25 on Tuesday. U.S. crude futures were
down 2 percent at $33.74 a barrel after hitting a one-month high of
$34.76 on Tuesday.
The dollar rose to 114.40 yen, recovering further from near 111 last
month. The euro was steady near Tuesday's one-month low of $1.08340,
under pressure from the expectations the ECB will step up monetary
stimulus next week.
Markets were also keeping an eye on U.S. "Super Tuesday", where
Republican Donald Trump and Democrat Hillary Clinton took big steps
toward securing their parties' presidential nominations.
(Reporting by Jamie McGeever; Editing by Larry King)
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