Commodity stocks lift
global shares, inflation in focus
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[October 18, 2016]
By Nigel Stephenson
LONDON
(Reuters) - Rising commodity prices pulled shares higher on Tuesday and
the dollar slipped from a seven-month high as bond yields fell, while
sterling briefly strengthened after data showed UK inflation rose by its
most in more than two years last month.
U.S. inflation data due later will also be a focus after Federal Reserve
Chair Janet Yellen suggested last week the central bank could allow
inflation to top its 2 percent target.
The weaker dollar helped lift oil and metals prices, lifting commodity
related stocks in Europe and Asia.
The pan-European STOXX 600 share index rose 1.2 percent, led higher by a
2.6 percent rise in the basic resources sub-index and a 1.4 percent gain
in oil and gas firms.
Britain's internationally-focused FTSE 100 index, in which miners are
heavily represented, rose 1.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.8
percent, led by financials and energy shares. Australia's benchmark
index was up 0.4 percent while Japanese stocks edged higher on a softer
yen.
Sterling hit a six-day high of $1.2272 before retreating, after data
showing annual consumer price inflation in Britain accelerated to 1.0
percent last month from 0.6 percent in August. Sterling last stood at
$1.2237, still up 0.5 percent on the day.
The numbers confirmed that a weak pound since June's vote to leave the
European Union is already pushing up some prices. British 10-year
government bond yields flat at 1.13 percent, having risen in recent days
with investors winding back expectations of further Bank of England rate
cuts.
Data due later is expected to show the U.S. core consumer price index
held steady at 2.3 percent last month, according to economists polled by
Reuters, above the Fed's 2 percent target.
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The
dollar eased by 0.2 percent against a basket of currencies, pulling back further
from a seven-month high hit on Monday, as investors digested recent comments
from Yellen and other Fed officials.
On Monday Vice Chairman Stanley Fischer said economic stability could be
threatened by low rates but it was "not that simple" for the Fed to hike.
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HSBC currency strategist Dominic Bunning said: "It's very hard for the dollar to
maintain a bull run at the moment, because a stronger dollar acts as a
tightening force on the U.S. economy ... so that makes it harder for the Fed to
raise rates in December."
The euro was up 0.2 percent at $1.1019 and the yen was down 0.1 percent at
104.03 per dollar.
AUSSIE
The Australian dollar gained 0.8 percent to $0.7683 after central bank chief
Philip Lowe said he was comfortable with the exchange rate and China's yuan
weakened marginally to about 6.74 per dollar, the latest in a series of six-year
lows.
A decline in oil inventories as the northern hemisphere winter approaches also
helped push crude prices higher.
Brent, the international benchmark, rose 40 cents to $51.92 a barrel.
The weaker dollar also helped lift copper 0.4 percent to $4,694 per tonne. Gold
prices also rose, gaining 0.5 percent to $1,261 an ounce.
(Additional reporting by Saikat Chatterjee in Hong Kong, Jemima Kelly in London;
Editing by Robin Pomeroy)
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