Reuters: US Dollar Report: GLOBAL MARKETS-Shares push higher ahead of U.S. jobs data

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GLOBAL MARKETS-Shares push higher ahead of U.S. jobs data Oct 5th 2012, 10:10 Fri Oct 5, 2012 6:10am EDT * FTSEurofirst 300 up 0.4 pct, MSCI global index up 0.2 pct * Euro holds onto gains after ECB reassures on bond buying * MSCI Asia ex-Japan hits five-month highs * BOJ announces no policy changes * US payrolls data due 1230 GMT By Marc Jones LONDON, Oct 5 (Reuters) - Global shares rose and the euro steadied near a two-week high against the dollar on Friday as investors awaited U.S. jobs data and took heart from the European Central Bank's assurances that it is ready to buy the bonds of troubled euro zone governments. The main market mover of the day is likely to be the monthly U.S. payrolls report due at 1230 GMT. Recent indicators have suggested the world's largest economy is gradually picking up, but investors are looking for firmer evidence. Following rises in Asian equities, the pan-European FTSEurofirst 300 index was up 0.5 percent by 0945 GMT, putting it on course for 1.5 percent rise this week. The MSCI index of global shares, set for a similar gain, was up 0.2 percent. The euro, closely linked to the bloc's debt crisis, dipped back to $1.30, but remained close to the two-week high of $1.3032 hit on Thursday. "Nothing really dramatic has happened this week and as long as the U.S. jobs data do not completely distort the picture later the general mood will probably remain cautious optimism," said Berenberg economist Holger Schmieding. "The overall trend for markets remains up because of expectations of more monetary easing by the Federal Reserve and the ECB restoring confidence in the future of the euro." A Reuters poll shows economists expect U.S. jobs to have increased by 113,000 last month although the jobless rate may still have ticked up to 8.2 percent from 8.1 percent in August. Markets were reassured by comments on Thursday from ECB President Mario Draghi that the bank was primed to buy Spain's bonds if it requested aid, and that Europe now had a "fully effective backstop mechanism in place" to protect the euro. Senior euro zone central bank sources told Reuters on Friday that the ECB was preparing for two months of large scale purchases one it deployed its programme, after which it would assess the situation. "The big focus is anything we hear on Spain but it's almost a game of cat and mouse." said Schmieding. "If bond yields stay where they are at the moment then Spain doesn't have to ask for help, but bond yields are only where they are because the market expects Spain to ask for help so eventually the game has to stop." RAND RAGE Tensions remained high in South Africa as unrest in the country's dominant mining sector spread. The rand fell 1.2 percent, close to a three-year low. Worries were further compounded after Shell declared force majeure on fuel deliveries in South Africa's economic hub of Gauteng province due to a two-week strike by more than 20,000 truck drivers. In Asia, the Japanese yen remained firm against the dollar and the euro after the Bank of Japan, as expected, took no new monetary easing measures.. The growing appetite for riskier assets lifted the Australian dollar away from a one-month low to $1.0267. Russia's central bank also kept interest rates unchanged, indicating that inflationary risks remain and playing down signs of an economic slowdown. Draghi's reiteration of the ECB's pledge to buy euro zone bonds dominated bond market sentiment ahead of next week's meeting of euro zone finance ministers and debt auctions from Italy, Germany and the Netherlands. German government bonds were little changed as midday approached, Portuguese 10-year yields fell to a three-week low following Lisbon's partial return to bond markets this week, while Italian and Spanish 10-year bond yields also edged lower. Spain remains a risk factor for markets as it puts off requesting a formal bailout. "Everyone will keep an eye on the (Ecofin) meeting but I don't think there's expectations of a firm decision (on aid for Spain). It could even expose more the differences in opinion," said Elwin de Groot, senior market economist at Rabobank. "Very short-term this could inject even more uncertainty and therefore a more negative sentiment in the market," he added. U.S. JOBS U.S. stock futures were pointing to a broadly flat open on Wall Street where focus will be firmly on the U.S. jobs data. The dollar was slightly firmer against key currencies . "Should today's report come in line with expectations and the same pattern be confirmed in the coming months, we see increasing chances that the Fed will act again to stimulate activity," said Newedge Strategy analyst Annalisa Piazza After jumping 4 percent on Thursday on supply fears, profit taking and worries about weak global economies ahead of the U.S. data, oil prices dipped 66 cents to $112.22. Gold, a safe-haven asset and a hedge against inflation as central banks flood the economy with cheap money, hit a new 11-month high of $1,795.69 an ounce. Schmieding at Berenberg said he expected central bank support to continue to underpin risk markets. "Equity markets could move modestly up but the upside is limited because we have already corrected the abnormal drop in European equities we saw last Autumn so we are almost back to normal." "For the euro it is probably the same story. With the Fed easing U.S. monetary policy a lot and the ECB just saying they will keep the euro together rather than committing to any easing, the dollar probably has downside to the euro," he added. (Reporting by Marc Jones; Editing by Will Waterman and Giles Elgood) Link this Share this Digg this Email Reprints

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