(Updates prices, adds comment, changes byline, dateline;
* U.S. bank earnings in focus
* "Trump trades" lift stocks
* Dollar up but on pace for soft weekly performance
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 13 European and U.S. stocks
advanced on Friday, on track to close the week on a firmer note,
while the dollar recovered as investors were encouraged by
upbeat bank earnings and positive U.S. economic data.
Investors largely shrugged off the biggest fall in Chinese
exports since 2009 to focus on U.S. data that suggested stronger
growth. Market participants largely resumed buying across equity
markets based on higher growth expectations that had tailed off
this week, with auto and bank shares leading the way.
Bank of America Merrill Lynch kicked off the U.S.
bank earning season, reporting a 47 percent rise in
fourth-quarter profit thanks to an upswing in market activity
following the election of Donald Trump as U.S. president on Nov.
JP Morgan Chase also reported strong earnings, with
a 24 percent rise in fourth-quarter profits.
U.S. economic data have also been a source of optimism as
retail sales rose in December given strong demand for
automobiles and furniture. Producer prices expanded as well.
"I think this reflects optimism about an uncertain future,"
said Juan Perez, foreign exchange trader at Tempus Consulting in
Washington. "If you look at things overall, they are not so
terrible: retail sales are up, producer prices are up, the labor
sector has been solid."
In late morning trading, the Dow Jones Industrial Average
edged up 0.1 percent to 19,907.7, while the S&P 500
gained 0.3 percent to 2,276.72. The Nasdaq Composite
, on the other hand, added 0.57 percent to 5,579.15.
The dollar, meanwhile, rebounded from losses against a
basket of major currencies the previous day to trade slightly
higher at 101.390, while it rose 0.3 percent against the
yen to 115.07 yen.
The dollar index though was still headed for its worst
weekly performance in more than two months.
The so-called reflation trade that had sent the dollar to a
14-year high last month was based on Trump's campaign promises
of increased fiscal spending, lower taxes, and deregulation,
all of which are inflationary and would likely drive the Federal
Reserve to raise interest rates faster than its normal pace.
In the bond market, U.S. Treasury yields rose across the
board bolstered by Friday's better-than-expected data such as
the big rise in U.S. inflation expectations as shown in the
University of Michigan consumer sentiment report.
"Trump optimism may be dying but he's coming in with a
Republican administration which is historically pro-business,"
said Perez of Tempus. "They're going to deregulate, they're
going to open markets, they're also going to expand economic
growth by investing in infrastructure."
Benchmark U.S. 10-year yields fell 13/32 in price, yielding
2.411 percent, up from Thursday's 2.361 percent.
German 10-year bond yields were also higher, up at 0.268
percent, from 0.234 percent late on Thursday.
Europe's broad FTSEurofirst 300 index added 0.93
percent to 1,446.08.
Germany's DAX was up 0.94 percent and Britain's
FTSE 100 rose 0.6 percent, on course for its 12th record
high close and 14th consecutive daily gain.
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.15 percent after rising to its highest
since late October the previous session. It was up 1.8 percent
for the week.
Japan's Nikkei stock index finished up 0.8 percent,
though it still ended the week down 0.9 percent.
In commodity markets, Brent crude was down 0.91
percent, at $55.5 a barrel, while U.S. crude fell 1.15
percent, at $52.4 per barrel. Spot gold fell 0.19
percent, to $1,193.28 an ounce, having risen overnight to a
seven-week high above $1,200.
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Jamie McGeever in London; Editing by James Dalgleish)