* Crude prices rise on hints of output deal
* Energy company shares lift global indices
* Wall Street set to open higher
* U.S. dollar broadly weaker ahead of Fed meeting
By John Geddie
LONDON, Sept 19 Oil prices bounced back from
multi-week lows on Monday, hauling up world stock markets and
commodity-linked currencies, on hints that producers were close
to reaching an output deal.
Crude prices rose more than 1 percent, with U.S. futures
bouncing off Friday's one-month low to $43.63 and Brent
climbing from a two-week trough to $46.30 after
Venezuela said producers could announce a deal this month.
A firmer oil price bolstered energy company shares in
bourses around the world, allowing European stocks to climb
after two straight weeks of losses. Wall Street was set
to open up around 0.5 percent.
It also helped lift commodity-linked currencies including
the Canadian, Australian and New Zealand dollars
by around half a percent, while the U.S. dollar was
Against a basket of other currencies, the greenback lost 0.2
percent to 95.894, giving up some of Friday's gains which
were the biggest in a single day since late June.
"It is not the first time this year we have had hopes of a
deal and they have been dashed, but for now the oil rebound is
supporting certain markets," said Frederik Ducrozet, a senior
economist at Pictet.
The pan-European 600 index which had fallen to a six-week
low on Friday, rose 0.7 percent, with the STOXX Europe 600 Oil &
Gas index advancing 0.8 percent.
Emerging market shares hit a one-week high, with
Hungary as the standout performer after a ratings promotion to
investment grade saw the Budapest share index jump to a
Earlier, MSCI's broadest index of Asia-Pacific shares
outside Japan gained 1.2 percent in a move that
was largely attributed to bets that the U.S. Federal Reserve
would skip a chance to raise rates at a policy meeting this
Shanghai put on 0.5 percent, while Taiwan
jumped 2.8 percent after a string of losses. Liquidity was
lacking, with Tokyo closed for a holiday.
A surprisingly large rise in U.S. consumer price inflation
reported on Friday seemed to add to the case for a hike and
pushed the dollar higher.
Yet most recent consumer and industrial activity data has
disappointed, leaving the market still pricing in only a 12
percent <0#FF:> probability of a rate rise this week, and 45
percent for December.
Assuming no move on policy, the focus will be on the FOMC's
forecasts for the funds rate, which this time extend to 2019.
"They may use the extension to lower their expectations for
rates in 2017 and 2018, so that they end up with the same
terminal level of rates, but just take longer to get there,"
said Marshall Gittler, head of investment research at FXPRIMUS.
"In other words, a slower, more gradual pace of tightening.
In that case, I would expect the dollar to weaken."
There was little discernible market reaction to bombings in
New York City and New Jersey and a stabbing at a Minnesota
The Bank of Japan also meets this week and could well go in
the opposite direction by easing policy, though conflicting
reports on what it might do have stoked much uncertainty.
Sources have said the BoJ will consider making negative
interest rates the centerpiece of future easing by shifting its
prime policy target away from base money.
Any steps that markets consider to be less than aggressive
would be likely to see the yen push higher and pressure the
For Reuters new Live Markets blog on European and UK stock
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(Additional reporting by Wayne Cole in Sydney; Editing by