* MSCI world share index at highest since May 2011
* U.S. equities falter after dip in U.S. consumer sentiment
* Chinese growth data boost global recovery outlook
* Yen hits new lows vs dollar and euro
By Herbert Lash
NEW YORK, Jan 18 World equity markets rose to a
20-month high on Friday after data indicated economic momentum
was picking up in China and the United States, while the yen hit
new lows ahead of next week's Bank of Japan meeting.
But U.S. stocks faltered in early trading after hitting
five-year highs on Thursday, with sentiment undermined by a
disappointing earnings outlook from chipmaker Intel and a report
showing U.S. consumer sentiment weakened for a second straight
month to its lowest in over a year in January.
The Thomson Reuters/University of Michigan's preliminary
reading on the overall index on consumer sentiment was 71.3,
down from 72.9 the month before. The index was at its lowest
since December 2011.
"It's a disappointing figure and helped put pressure on
risky assets," said Greg Moore, a currency strategist at TD
Securities in Toronto.
"Markets for the last two weeks have been grinding higher,
without much fundamentals backing it up. So this is a reality
check. But it's still fairly early in the year and things could
An upgrade of Caterpillar to overweight from neutral
by Piper Jaffray helped buoy the Dow, but the S&P 500 and Nasdaq
dipped modestly. Piper Jaffray also raised its price target to
$113. In early trading, Caterpillar was up 1.1 percent at
The Dow Jones industrial average was down 1.57
points, or 0.01 percent, at 13,594.45. The Standard & Poor's 500
Index was down 1.91 points, or 0.13 percent, at 1,479.03.
The Nasdaq Composite Index was down 8.05 points, or 0.26
percent, at 3,127.96.
China reported that its economy grew at a slightly
faster-than-expected 7.9 percent in the fourth quarter of 2012,
a clear sign it has avoided a sharp economic slowdown, though
the annual growth rate was its weakest in 13 years.
The Chinese data came on top of strong U.S. labor and
housing market reports on Thursday, providing fresh impetus to a
broad rally in equities, precious metals and commodities since
the start of the year.
MSCI's index of leading world shares hit its
highest level since May 2011 at 351.70 points, while gold was up
$2.10 at $1,689.30 an ounce.
But oil prices slipped from their highs, having already
gained strongly this week on a brighter growth outlook and
supply concerns after the failure of U.N. talks with Iran and
amid a hostage crisis at an Algerian gas field.
Brent crude was down 27 cents at $110.83 barrel,
retaining the bulk of Thursday's $1.42 a barrel gain, while U.S.
oil was down 14 cents at $95.35 a barrel, also holding on
to the bulk of the previous session's $1.25 gains.
In Europe, the broad FTSEurofirst 300 index was
flat near a two-year high at 1,165.86 as investors locked in
some recent gains before the corporate earnings season gets
underway in earnest next week.
The stronger U.S. data and mounting expectations for more
aggressive easing by the Bank of Japan (BOJ) next week lifted
the dollar past 90 yen to its highest since June 2010,
and the euro to its peak since May 2011 of 120.73 yen.
Sources familiar with the BOJ's thinking told Reuters the
central bank, under relentless pressure from Prime Minister
Shinzo Abe, will consider making an open-ended commitment to buy
assets until 2 percent inflation is in sight.
"This is a big deal," said Jens Nordvig, global head of
currency strategy at Nomura Securities in New York.
"But as always from a trading perspective, it matters
greatly what is already priced," he said.
The euro last traded 0.4 percent lower against the yen
at 119.62 yen, down from 120.70 earlier - its highest
since May 2011.
The euro was also down against the dollar, falling 0.5
percent on the day to $1.3305.
The benchmark 10-year U.S. Treasury note was up
9/32 in price to yield 1.8505 percent.