Reuters: US Dollar Report: GLOBAL MARKETS-Shares eye 5-yr high after Abe win, focus turns to earnings

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GLOBAL MARKETS-Shares eye 5-yr high after Abe win, focus turns to earnings Jul 22nd 2013, 13:17 Mon Jul 22, 2013 9:17am EDT * European shares edge higher after Nikkei's post-election gains boost Asia * Makeshift Portugal deal pushes up euro periphery bonds, doubts remain * Broadly softer dollar helps underpin commodity prices * Wall Street seen opening 0.1 percent higher By Marc Jones LONDON, July 22 (Reuters) - World shares traded near five-year highs on Monday as focus switched to an approaching wave of U.S earnings after Shinzo Abe strengthened his power base, adding weight to Japan's radical stimulus plans. The mood was also helped by a pledge from G20 nations on Saturday to put growth before austerity to revive the global economy, which the bloc said was "too weak". The yen rebounded after an initial dip in Tokyo, but many traders viewed that bounce as temporary in view of Prime Minister Abe's upper house election win on Sunday. Riskier assets including peripheral euro zone bonds got a boost after Portugal's president moved to keep the country's coalition government intact, patching over recent troubles . Benchmark Bund futures were flat. Stock market investors' eyes turned to this week's dump of U.S. earnings, with global heavyweights McDonald's and Apple due on Tuesday in amongst eight Dow Jones components and 157 from the S&P 500 in coming days. Wall Street was expected to open marginally up with obvious buying incentives lacking after both the S&P 500 and Dow Jones hit all-time highs last week. "A lot of good news was priced in (for U.S. earnings) and so far they have been positive, so if we don't see any negative surprises from here it will be supportive for markets," said Rabobank economist Emile Cardon. A resounding election victory for Abe and his LDP party with its coalition partners over the weekend had lifted Asian shares overnight in a choppy session. Upbeat results from Dutch electronics giant Philips and Swiss Banks UBS and Julius Baer then helped European shares only for some profit taking on the 9 percent they have made since June to trim gains. Overall, the Europe's stock, currency and bond markets were within recent ranges, but the earlier gains in Asian equities meant MSCI's world index, which tracks in 45 countries, was up 0.2 percent and within touching distance of a five-year high hit at the end of May. "We are seeing a bit of position adjustment today but we have got a general positive outlook and I don't think the trend is going to break," said Societe Generale strategist Kit Juckes. CHOPPY YEN The yen bounced back after an initial dip in Tokyo trading on some dollar selling by Japanese investors, which in turn triggered stop-loss selling in thin conditions. "Post the Japanese upper house election, we would expect the Abe government's economic reform rhetoric to gain further momentum, putting JPY back under pressure," Morgan Stanley's currency strategists wrote in a note. By 1230 GMT the dollar was down 0.75 percent on the day at just under 99.88 yen, a turnaround from an Asian session high of 101.05. The euro was also 0.3 percent lower at 131.51 , well off an early high of 132.47. The dollar index was slipping further away from its recent 3-year high as early U.S. trading began. The euro was slightly higher at $1.3181, while the Australian dollar extended gains to 0.5 percent to $0.9220 , buoyed by Friday's move by China - Australia's single biggest export market - to ease lending rules. COMMODITIES CREEP HIGHER Commodities were mostly firmer thanks to the softer dollar. U.S. crude held near a 16-month peak of $109.32 a barrel, while copper gained 1.5 percent to $6,990 a tonne and gold hit a one-month high of $1,323 an ounce as it continued to recover from last month's three-year low. In emerging markets, the Turkish lira was near a one-month high before an expected interest rate rise on Tuesday, while Hungarian stocks extended losses on worries about government plans to change foreign currency loan rules. Turkey's central bank has been selling heavy amounts of foreign currency in recent weeks to lift the lira from record lows and most economists in a Reuters poll see a rate rise of 50-100 bps when the central bank meets on Tuesday. "The benchmark ... for the market will be 100 bps ... less than this and Turkish assets are likely to come under renewed selling pressure," said Tim Ash, emerging markets strategist at Standard Bank. Link this Share this Digg this Email Reprints

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