* Banks lift stocks, but down on week
* Dollar, bond yields extend fall
* Markets cite Trump disappointment
By Jamie McGeever
LONDON, Jan 13 European and U.S. stocks looked
to end a sluggish week on a high note on Friday, while the
dollar was on track for its biggest weekly fall in two months
and U.S. bond yields eyed their longest run of weekly declines
Investors largely shrugged off figures that showed Chinese
exports fell the most last year since 2009, and will look to
earnings reports from U.S. banks JP Morgan Chase, Bank
of America Merrill Lynch and Wells Fargo later
in the day for direction.
"The banking sector will be the major focus," said Naeem
Aslam, chief market analyst at Think Markets UK. "With rising
interest rates and hopes of more friendly regulation, the shares
of these banks have a lot of upside in the coming days."
Bank stocks led the charge in European trading, rising 1
percent to lift the FTSEuroFirst 300 0.5
percent. The broader index was still down slightly on the week
though, its first weekly fall in six.
Shares in Fiat Chrysler Automobiles rose 6
percent, recouping some of the previous session's 16 percent
slump triggered by the U.S. Environmental Protection Agency's
(EPA) accusations that the car maker illegally masked excess
Germany's DAX was up 0.5 percent and Britain's FTSE
100 rose 0.4 percent, on course for its 12th record high
close and 14th consecutive daily gain.
U.S. futures pointed to a slightly higher open on Wall
Street. Thursday's slip into the red marked yet another
failed attempt to lift the Dow Jones through the magical 20,000
Wall Street was chilled by president-elect Donald Trump's
failure to address economic policy plans at his first news
conference since winning the Nov. 8 election, and growing fears
that his proposed protectionist trade policies will choke global
Chinese trade data on Friday poured oil onto those flames.
December exports fell by 6.1 percent from a year earlier,
meaning the overall fall in exports last year was the biggest
since the depths of the crisis in 2009.
As the world's largest trading nation, China could come
under pressure from protectionist measures this year if Trump
follows through on his campaign pledges to brand it a currency
manipulator and impose heavy tariffs on the country's imports.
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.1 percent, after rising to its highest
levels since late October in 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.
BOND YIELD RETRACEMENT
The symbiotic dance between the dollar and U.S. Treasury
bond yields held firm on Friday. Both headed lower to end a week
in which has seen the dollar fall almost 1 percent and yields
extend their longest downturn since last summer.
The 10-year yield was flat at 2.36 percent,
recovering from a six-week low hit on Thursday. But it's down
more than 5 basis points on the week and around 30 bps since the
Federal Reserve raised interest rates in mid-December.
The dollar wallowed around five-week lows against a currency
basket at 101.29, and down 0.9 percent for the week.
The euro rose 0.2 percent to $1.0635, well above last week's
14-year low of $1.0340 and poised to gain 0.9 percent for
the week, while the dollar was steady against the yen at 114.75
The dollar index had scaled 14-year peaks this month, on
speculation that Trump's policies would spur growth and
inflation, and prompt the Fed to raise interest rates at a
faster pace than previously expected.
But doubts have crept in.
"Bond markets continue to retrace from the yield highs set
in the middle of last month," RBC Capital markets rates
strategists wrote in a note to clients on Friday.
"The latest move (is) seen as a typical
'buy-the-rumor-sell-the-fact' reaction as Donald Trump's
pre-inauguration press conference proved to be a disappointment
in terms of forthcoming growth boosting policies," they said.
The overnight rise in crude oil prices, bolstered by the
weaker dollar as well as news that Saudi Arabia has cut oil
output to its lowest in almost two years and plans further
reductions, fizzled out in early European trading.
Brent crude was down 0.1 percent at $55.95 a barrel,
while U.S. crude was also down 0.1 percent at $52.97.
Spot gold held steady at $1,195.87 an ounce, as
investors locked in gains on its overnight surge to seven-week
highs above $1,200.
(Reporting by Jamie McGeever; Editing by Toby Chopra)