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 European shares opened 0.2 percent higher, on course for their third
straight week of gains as solid results for the world's largest
advertiser WPP <WPP.L> dovetailed with the latest tick up in
commodities markets and hopes for another shot of European Central
Bank stimulus next week.
Investors seem to have put recent worries about a potential global
recession firmly behind them for the moment and the U.S. 'non-farm'
payrolls numbers at 1330 GMT (06:30 a.m. EST) are expected to show
the labor market in the world's largest economy ticking along
nicely.
A Reuters poll of economists forecasts them to show 190,000 jobs
were added last month and that the overall unemployment level
staying at an eight-year low of 4.9 percent.
"We didn't believe the 'world is going to end' story, but the way
the mood has changed in the last couple of weeks is just crazy,"
said Janus Capital portfolio manager and global research analyst
Ryan Myerberg.
"Since the beginning of the year it has been like driving down the
motorway where every couple of miles a tractor has overturned,
whether that be China, oil, the banks, that you have to swerve
around."
The dollar was grinding higher again on cautious bets that a good
payrolls number later will, as Myerberg at Janus expects, support
the Federal Reserve's case to increase U.S. rates again later in the
year.
The greenback was up 0.1 percent against a basket of major
currencies as the euro nudged back to $1.0936 <EUR=> to roughly
where it started the week and the yen <JPY=> steadied at 113.74.
Traders also locked in some profits on sterling <GBP=D4> having seen
it bounce back almost 2 percent this week from last month's 5
percent 'Brexit' battering.
In the bond markets, investors were beginning to head to the
sidelines ahead of the payrolls data later.
U.S. Treasuries were flat in both the 2- and 10- year space, German
Bund yields bobbed up marginally and Portugal's yields were not far
from one-month lows ahead of the first of a number of back-to-back
credit rating reviews.
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ASIA RISING
The return of risk appetite was closely tracking the recovery in oil
and other commodity prices.
Benchmark Brent futures were testing two-month highs of $37.40 per
barrel as they headed for a gain of 6.6 percent this week and
industrial metals iron ore and copper both hit 4-month highs,
with the latter on course for its best week in roughly six months.
"Now you have had some stability in the oil price and some producer
currencies, you're starting to get more robust cost bases forming
for commodities, which suggests that the vulnerability of metals to
more downside is slowing," said Mark Keenan at Societe Generale in
Singapore.
Emerging markets stocks were roaring too. MSCI's 23-country EM index
rose 0.4 percent for a sixth day of gains, its longest winning
streak and best week since October.
Brazil's Bovespa index had surged more than 5 percent on Thursday,
its biggest gain in six years, on news that President Dilma Rousseff
could be implicated in a sweeping corruption scandal.
That encouraged investors who blame her administration's policies
for driving Brazil into deep recession.
MSCI's broadest index of Asia-Pacific shares outside Japan ended the
week at its highest in almost two months. Another 0.6 percent rise
saw it chalk up a 5.5 percent gain for the week, its strongest since
October.
Japan's Nikkei was up 5 percent on the week too, while the two main
Chinese share markets took their gains since Monday to 4.7 and 3.5
percent.
Investors are awaiting the start of the annual meeting of China's
parliament on Saturday, which will map out economic goals for the
next five years, with markets hoping for enough stimulus to fend off
any major slowdown worries.
The People's Bank of China set the midpoint rate at 6.5284 per
dollar prior to Friday's market open, 0.20 percent firmer than the
previous fix.
(Reporting by Marc Jones; Editing by Toby Chopra)
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