* Wall St holds near record highs
* Corporate earnings, M&A underpin valuations
* Trump promises "phenomenal" tax reform, no details
* Banks weigh on European stocks, miners up on China
* Eyes on Trump-Abe meeting in Washington
By Vikram Subhedar
LONDON, Feb 10 The dollar rose and U.S. stock
futures held near record highs as investors cheered upbeat
Chinese trade data and hopes of business-friendly tax cuts in
the United States, although lingering concerns over political
risks kept gains in check.
President Donald Trump said on Thursday that in coming weeks
he would announce something "phenomenal" in terms of tax
although he offered no further details.
Renewed speculation that Trump's economic policies will help
boost economic growth and inflation pushed U.S. Treasury yields
higher and lifted the dollar.
Strong Chinese trade numbers of Friday added to a sense that
inflationary pressures could be stirring.
Evidence of Chinese growth lifted shares of
commodity-related sectors, in particular blue chip mining,
across Europe helping regional indexes inch higher back towards
last month's peaks.
Futures on the S&P 500 were up about 0.1
percent. Wall Street's three main indexes notched record highs
European shares were off day's peaks weighed down
by weakness in banking shares. They are still poised to close
the week about 1 percent higher.
Healthy corporate results and the continued uptick in
European dealmaking which is seeing its strongest start to the
year in more than a decade helped underpin valuations.
Reckitt Benckiser has agreed to buy U.S. baby formula
maker Mead Johnson Nutrition for $16.6 billion, giving
the British consumer goods company a new product line and
expanding its presence in developing markets.
Meanwhile, analyst sentiment on European earnings is the
brightest it has been in 6 years while in the U.S. fourth
quarter earnings are forecast to grow 8.5 percent, according to
Thomson Reuters I/B/E/S.
"We've had Trump's comments on tax reform, the phone call
with China and quite decent China trade data, so there is a
risk-on mood again in markets," DZ Bank rates strategist Rene
Broadly upbeat sentiment was evident in investment flows too
with investors pumping $13 billion into bonds, $6 billion into
equities and even $2 billion into gold, in the past week
according to latest data from Bank of America Merrill Lynch and
fund tracker EPFR.
On the political front, Trump seemed to change tack and said
he would honour the longstanding "one China" policy during a
phone call with China's leader, a major diplomatic boost for
Beijing which brooks no criticism of its claim to neighbouring
TRUMP AND ABE
Focus now shifts to a meeting later on Friday between Trump
and Japan's Prime Minister Shinzo Abe in which Abe is expected
to propose a new cabinet level framework for U.S.-Japan talks on
trade, security and macroeconomic issues, including currencies.
The market focus will be watching for the results of
discussions between Abe and Trump on the future of trade policy,
the car industry, defence policy and monetary policy, analysts
at Morgan Stanley, wrote in a note to clients.
The dollar was up 0.3 percent to a 10-day high against the
yen and is poised to finish the week about 1 percent
stronger against the Japanese currency.
The dollar index, which tracks the greenback against a
basket of six major currencies, added 0.2 percent on the day to
100.8, on track to gain 0.8 percent for the week.
The week has seen heightened fears about euro zone political
risks with French bond yields climbing to a 17-year high as
fears about a strong showing for far-right leader Marine Le Pen
ahead of a presidential election rattled markets.
Societe Generale, however, said the "Armageddon risk" ahead
of the French elections is overdone.
In commodities, crude oil prices extended gains supported by
strong Chinese crude imports and OPEC-led production cuts.
Brent crude futures, the international benchmark for
oil prices, rose 1.5 percent to $56.48 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were
up 1.3 percent.
(Additional reporting by Dhara Ranasinghe, Editing by Toby