LONDON Oct 14 Global stocks and the dollar
edged up on Friday, erasing some losses from the previous day,
as stronger-than-expected Chinese inflation data eased some
concerns about the health of the world's second-biggest economy.
September producer prices in China unexpectedly rose for the
first time in nearly five years, while consumer inflation also
beat expectations, setting the tone for equity markets globally.
European shares tracked Asian markets higher. The
pan-European STOXX 600 was up 0.9 percent, led higher
by its mining stocks, while MSCI's broadest index of
Asia-Pacific shares outside Japan was up 0.6
However, equities were still set for their largest weekly
drop in over a month after a week which has seen expectations of
a Federal Reserve rate hike build and substantial volatility in
While the MSCI World index was up 0.2 percent on
Friday, it was down 1.2 percent for the week - its biggest
weekly drop since early September.
"Inflation has been quite a worry for some time, but the PPI
number today is a very nice change, and a much better number
than the negative numbers we had prior. So that gives us a bit
of confidence," said Veronika Pechlaner, European equity fund
manager at Ashburton, who said that the falls this week were not
a major cause for concern.
"The market felt exuberant heading into this week... We've
had a strong couple of months, so now a bit of normalisation is
The dollar index rose 0.4 percent to 97.908, and was
set for a weekly gain. It was down slightly from a seven month
high touched on Thursday.
Retail sales data and remarks from Federal Reserve Chair
Janet Yellen and Boston Federal Reserve President Eric Rosengren
were due later in the day. The Fed's minutes from its September
meeting prompted investors to raise their bets on a December
rate rise, and fuelled the rally in the greenback this week.
The strength of both domestic and global growth will be a
key consideration for the Fed, demonstrated when weak Chinese
export numbers on Thursday not only hit global equities but also
stopped a rise in U.S. yields and halted the dollar's advance.
Even despite Friday's inflation data, Chinese stock ended
little changed on Friday as investors wrestled with the mixed
economic picture. The producer price increase will be good news
for profits and for Beijing as the government struggles to
reduce a mountain of corporate debt.
The greenback, which slid Thursday to 103.340 yen on the
Chinese trade data, gained 0.5 percent to 104.22 yen,
edging back towards a 2-1/2-month peak of 104.635. It was on
track to gain 1.3 percent on the week.
The euro slipped 0.5 percent to $1.1009 after seeing
a 2-1/2-month low of $1.0985 on Thursday. The common currency
was en route for a 1.7 percent weekly loss. European bond yields
edged higher ahead of Yellen's speech.
Elsewhere in currencies, the pound dipped 0.5 percent to
$1.2192. It was on track to lose 1.9 percent this week.
Comments by European Council President Donald Tusk, who will
run the Brussels side of Britain's negotiations on leaving the
EU, that the bloc will not offer London any softer terms than a
"hard Brexit" helped keep the pound under pressure. Such a deal
would end Britain's membership of the single market and disrupt
access to the country's main trading partner.
Sterling also fell against the euro, but was off of the
week's lows against both the euro and the dollar. Several Bank
of England policymakers are due to speak on Friday, and markets
are keen for clues on whether another cut in interest rates is
likely, following one cut in the summer after the referendum.
The Singapore dollar hit a seven-month low after
the economy unexpectedly contracted in the third quarter,
keeping alive easing prospects even though the central bank
stood pat on policy earlier in the day.
Thailand's stocks rose 4 percent and the baht
gained about 0.9 percent versus the dollar after the
government urged the country to remain calm after the death of
King Bhumibol Adulyadej.
"On the assumption that the succession goes smoothly, I
would assume that foreign investor inflows will continue," said
Andrew Bresler, director at Saxo Capital Markets based in
The Turkish lira fell again, though it was up from
Thursday's record low. The market is anxious over government
plans to push through an executive presidential system.
Crude oil extended gains after bouncing overnight on a U.S.
government report showing hefty draws in diesel and gasoline.
Brent crude was up 0.8 percent at $52.46 a barrel,
having risen to a one-year peak of $53.73 on Monday on
expectations for an OPEC output cut.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Toby Chopra)