GLOBAL MARKETS-Shares bound higher as Fed meeting nears, dollar firms
* Wall Street set to open higher, focus on Fed meeting * European shares jump 1 pct, Nikkei charges up 2.3 pct * Dollar recovers vs yen, but hovers near lows against major currencies * Oil pushes up above $106 as Syria standoff looms By Marc Jones LONDON, June 17 (Reuters) - The dollar edged up against the yen and euro while European and Asian shares recouped a large slice of last week's losses on Monday, as investors pinned their hopes on a cautious tone from the U.S. Federal Reserve this week. Uncertainty over the course of Fed policy has triggered a broad sell-off in riskier assets over the last month. Investors are hoping for some clarity on Wednesday when the U.S. central bank concludes a two-day meeting. Markets appeared to be largely putting aside last week's concerns about a reduction in stimulus and settling on the view that the Fed will stress its intention to take a cautious approach to moving down the gears when the time comes. Stock futures pointed to Wall Street opening up around 0.8 percent, after Asian and European stocks and other risk assets enjoyed a strong start to the week. A 2.7 percent jump in Japan's Nikkei lifted markets and rises of 0.7 to 1.5 percent in London, Frankfurt and Paris left European shares up more than 1 percent, making up more than half of last week's falls. The dollar was also broadly stronger on the view the Fed will send a reassuring message this week, though it was starting to flag as U.S. dealing began to gather pace. The jump in the Nikkei had seen the yen fall back to 95 yen to the dollar from a two-month high hit last week, but profit-taking on the greenback brought the U.S. unit back to 94.74. It also slipped against the euro and was last at $1.3340. For analysts, it all pointed to ongoing market volatility. "Everyone wants clarity on what is going to happen and when it is going to happen, but I don't think we are going to get that because the Fed is not going to box itself in to something," said Dan Morris, a global macro strategist at JP Morgan in London. "This uncertainty is something the market is just going to have to get used to... Today the market is back up but does that mean everything is hunky dory again? I don't think so." DATA Financial markets have always known that the Fed would have to start withdrawing its stimulus once the U.S. economy was out of the emergency ward, but Bernanke's comments on May 22 that the bank might 'take a step down' in the pace of bond purchases in coming months still came as a shock. The positive side for investors is that it suggests the global economy is gradually recovering. Data on Monday showed German wages rose at their fastest pace in almost four years at the start of 2013 while euro zone exports jumped in April. UK house prices also picked up. Debt markets, like most others, remained fixated on the likely longevity of Fed support, but the risk that the euro zone's troubles could flare up again also remains on peoples' minds. Safe-haven German government bonds had reversed early losses by midday with traders citing concerns that tensions in Greece's government could prompt an early election. Exactly a year after a general election brought Prime Minister Antonis Samaras and his two leftist allies to power, the three parties have fed fears of hugely disruptive snap polls by refusing to compromise over the closure last week of the state broadcaster ERT. SUPERPOWER STANDOFF Brent crude oil rose above $106 per barrel as a superpower standoff over the Syrian civil war intensified, raising the risk of conflict spilling into the Middle East oil-producing region. Although Syria is not key to global oil supply, analysts are worried the turmoil there could drag in other countries and plunge the region into conflict. The troubles were expected to dominate a meeting of G8 leaders in Northern Ireland. At their first private face-to-face meeting in a year, U.S. President Barack Obama will try to find common ground with Russia's Vladimir Putin after angering Russia by authorising U.S. military support for opponents of Syria's president. "Oil is currently being driven primarily by geopolitics," said Commerzbank senior oil analyst Carsten Fritsch. "The decision of the United States to supply arms to the rebels in Syria threatens finally to turn the civil war in Syria into a proxy war between the world powers, given that Russia is providing military support to the Assad regime."
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