One last hurrah for risky assets before year-end

By Natsuko Waki

LONDON (Reuters) - Risky assets such as equities and emerging markets may have scope for another rally before the year is out as policymakers renew pledges to keep economic boosters in place given high jobless levels and fragile banks.

Frustrated with near-zero returns on money market funds and Treasury bills, investors are continuing their migration back to a range of higher-yielding securities and that is unlikely to reverse as long as official interest rates stay rock bottom.

Finance chiefs from Group of 20 major economies meet in St Andrews, Scotland for a two-day meeting which started on Friday.

While there have been plenty of signs the global economy is recovering, world stocks suffered a set back in the latter half of October as some investors banked profits on the 75 percent surge of the MSCI world since March and closed books before the often-volatile yearend period.

The hiatus was confirmed by fund trackers who saw a brief return of inflows to "safe" money market funds.

But concerns eased this week about early or sudden reversals of near-zero interest rates in the major economies. The U.S. Federal Reserve said rates would remain low for an extended period and the Bank of England even increased its so-called quantitative easing, or money-printing, programme.

Also, Friday's data showed the U.S. economy lost a bigger-than-expected 190,000 jobs in October -- sending the unemployment rate as high as 10.2 percent -- and reinforced the view that official interest rates would not be rising soon.

Next week's quarterly results from major European banks, including HSBC (HSBA.L), Barclays (BARC.L) and Credit Agricole (CAGR.PA), may also serve a reminder banks remain fragile and are not yet fit to cope with more normal monetary policy.