* Global shares gain on data, euro hits 11-month peak
* Positive global growth outlook also supports oil
* European banks to repay more ECB loans than predicted
* German Ifo raises hopes of euro zone turnaround
By Herbert Lash
NEW YORK, Jan 25 The euro hit an 11-month high
and global equity markets rose on Friday on signs of a healthier
European financial system and a brighter outlook for Germany,
while U.S. stocks extended a rally to an eighth day.
Solid U.S. corporate earnings and the strongest seasonal
inflows into U.S. stock mutual funds in a decade also helped
lift Wall Street, and the S&P 500 topped the 1,500 mark for a
second day in a row, a level last reached in late 2007.
News from Europe was also bullish. The European Central Bank
said banks will repay 137 billion euros of crisis loans next
week, handing more cash back earlier than expected in a sign
parts of the financial system are returning to health. [ID:n
The repayments show financial strains are receding and
"allowing investor risk appetite to rise. So you're starting to
see more interest in stocks than in bonds, less interest in
safe-haven currencies, and just a general rise in risk
appetite," said David Joy, chief market strategist at Ameriprise
Financial in Boston.
By taking back the three-year loans after only one year, the
ECB has become the first major central bank to start moving away
from unconventional monetary policy measures to tackle the
crisis. By contrast, the U.S. Federal Reserve and Bank of Japan
are buying bonds to stimulate economic growth.
The scale of the repayment, which beat the average estimate
of around 100 billion euros in a Reuters poll, sent the euro
higher, pushed German government bond prices down and boosted
bank stocks across the euro zone.
"This is more than we had expected and underlines the
material improvement in funding conditions for most European
banks in the past 12 months," said Michael Symonds, a credit
analyst at Daiwa Capital Markets.
Global shares as measured by MSCI's all-country world equity
index rose 0.39 percent to 354.56.
The Dow Jones industrial average was up 49.78 points,
or 0.36 percent, at 13,875.11. The Standard & Poor's 500 Index
was up 5.18 points, or 0.35 percent, at 1,500.00. The
Nasdaq Composite Index was up 12.59 points, or 0.40
percent, at 3,142.97.
Among companies beating analysts' expectations, Procter &
Gamble Co's quarterly profit blew past expectations and
Honeywell International Inc posted earnings just above
Wall Street estimates. P&G rose 3.9 percent to $73.17 but
Honeywell barely edged higher, up 0.02 percent at $68.25.
Of companies in the S&P 500 that have reported earnings to
date for the fourth quarter of last year, 68 percent have beaten
analysts' expectations, slightly higher than the 65 percent
average over the previous four quarters.
European shares scaled fresh multi-month peaks on the
bigger-than-expected loans paybacks and after the closely
watched Ifo business morale index beat consensus estimates for
January to match the most optimistic economist's forecast.
Frankfurt's DAX index led the rally, scaling
five-year highs and closing 1.4 percent higher.
The FTSEurofirst 300 index of pan-European shares
closed 0.32 percent higher at 1,174.81 points.
German bond futures fell 76 ticks
"People are choosing to pounce on any bit of good news. For
the moment the trend is very much to the upside," said Stephen
Walker, head of equities research and market strategy at
The euro hit $1.3471, its highest since February 2012, to
extend gains following the release of data showing the German
economy gathering speed again after contracting late last year.
The euro last traded up 0.64 percent at $1.3459.
Data showing new U.S. single-family home sales fell in
December was not a cause for concern on Wall Street as the
median sales price rose and the sector still appears set to be a
bright spot in the U.S. economy's recovery.
The Commerce Department raised its estimate for sales in
November by 22,000 to a 398,000-unit rate, making the sales pace
for the month the fastest since April 2010. Government data for
new home sales are subject to substantial revisions.
Manufacturing in China and the United States grew this month
at the quickest pace in about two years.
Oil prices rose above $113 a barrel as robust economic data
from the United States, China and Germany lifted the outlook for
global fuel demand. Brent crude rose 13 cents to $113.41
a barrel. U.S. crude fell 1 cent to $95.94.
U.S. Treasury debt yields rose, with 30-year bonds trading a
point lower in price after better-than-expected euro zone data
spurred selling of safe-haven U.S. government debt.
The benchmark 10-year U.S. Treasury note was
down 20/32 in price to yield 1.9237 percent.