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World stocks hit new high as Spain relief, tech rally boost European trading

[October 30, 2017] By Helen Reid

LONDON (Reuters) - A strong rally in the technology sector helped drive global stocks to a record high on Monday, while a recovery in Spanish markets helped to lift European shares after an opinion poll smoothed investors' concerns over Catalan secession.

MSCI's world equity index <.MIWD00000PUS>, which tracks shares in 47 countries, rose 0.2 percent to its highest ever level. The index has surged 17.7 percent so far in 2017, and is on track for its best annual showing since 2013.

Euro zone stocks <.STOXXE> climbed 0.2 percent, holding near their highest level in 10 years. European stocks have rallied this year as a healthy economy dovetailed with convincing growth in corporate earnings and a reduction in political risk.

"There is an avalanche of things that are happening or going to happen, but markets are just shrugging it off. It's like markets have been vaccinated against bad news thanks to the strength of the global business cycle," said Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management in Geneva.

Spanish stocks jumped 1.5 percent and government borrowing costs fell after a weekend survey suggested Catalan secessionists may lose their majority in regional elections scheduled for December.

Spain's benchmark 10-year bond yield fell 2 basis points to 1.52 percent <ES10YT=TWEB>. Banks Caixabank <CABK.MC> and Sabadell <SABE.MC>, which moved their headquarters out of Catalonia due to the crisis, led gains on the IBEX <.IBEX>.

The broader market showed signs of relief, with euro zone banks <.SX7E> rising 0.7 percent, and Italian stocks - which have been sensitive to the Spanish crisis - up 0.4 percent.

Technology stocks also drove European trading, riding a wave of gains on the Nasdaq and in Asia after Apple <AAPL.O> said pre-orders for its new iPhone X were "off the charts".

iPhone component suppliers AMS <AMS.S>, Dialog Semiconductor <DLGS.DE> and STMicro <.STM.MI> led gains.

Europe's tech sector <.SX8P> has quietly boomed, and has outperformed the Nasdaq <.NDX> so far this year.

U.S. stock futures pointed to a slight pullback at the open after blistering tech-driven gains on Friday. Dow Jones Industrial and S&P 500 futures were down 0.2 percent, while the tech-heavy Nasdaq was set for a 0.1 percent dip.

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A man looks at a stock quotation board outside a brokerage in Tokyo, Japan, April 18, 2016. REUTERS/Toru Hanai

CENTRAL BANKS IN THE SPOTLIGHT

In a week of policy meetings by three major central banks, gold edged down 0.1 percent on investor caution.

The Bank of England is widely expected to raise rates on Thursday, reversing its monetary easing following Britain's June 2016 vote to leave the European Union, but investors feared that the decision could create more volatility than the well-received stimulus extension by the European Central Bank last week.

"This coming week will see whether the BoE has also managed to steer markets in the right direction," said Societe Generale analysts in a note.

Sterling <GBP=> rose 0.3 percent against the dollar as traders bid the currency higher on the expected rate rise.

Other major currencies kept to tight ranges as markets also awaited interest rate decisions by the Bank of Japan and the U.S. Federal Reserve.

The dollar <.DXY> fell 0.3 percent against a basket of currencies as investors focused on the impending appointment of the next Federal Reserve chair, with speculation rife that Fed governor Jerome Powell is the favored candidate.

An announcement is expected this week.

Relief over the situation in Spain helped the euro recover from a three-month low to trade up 0.3 percent at $1.1637. The ECB's decision last week to extend bond purchases into September 2018 had sent the single currency sharply lower.

Oil markets firmed and energy stocks rose on expectations that an OPEC-led production cut due to expire next March would be extended.

Brent crude held above $60 a barrel, near its highest since mid-2015, while U.S. West Texas Intermediate (WTI) crude futures were near an eight-month high. Europe's oil and gas stocks rose 0.6 percent, among top gainers.

In other commodities, copper traded up 0.5 percent.

A surge in tech stocks helped MSCI's broadest index of Asia-Pacific shares outside Japan gain 0.4 percent overnight.

Apple's results on Thursday could offer the next big catalyst for tech stocks' seemingly unstoppable rise.

(Additional reporting by Sujata Rao; Editing by Gareth Jones)

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