* World shares rise as China's trade data beats forecasts
* Euro near two-week low on renewed hopes for ECB rate cut
* European shares rise 0.6 pct but on course for weekly drop
* Copper, oil rise on firmer demand outlook
By Marc Jones and Richard Hubbard
LONDON, Feb 8 World shares rose and the euro
hovered near a two-week low on Friday, on course for its biggest
weekly loss in seven months after the European Central Bank
rekindled speculation about another cut in interest rates.
Strong Chinese trade data also lifted optimism about global
growth prospects, boosting oil, copper and shares, although U.S.
stocks were poised for a mixed start with the key S&P 500 index
expected to record its first weekly drop of the year..
The ECB left rates at a record low 0.75 percent on Thursday
but the bank's President Mario Draghi levered the door to a cut
back open by indicating it would monitor whether the euro's rise
over recent months could push inflation below its comfort zone.
European shares were enjoying their best day of the month on
the better Chinese data and hopes lower rates -- or at least the
threat of them -- would reverse some of the 8 percent rise in
the trade-weighted value of the euro since August.
"The ECB had quite an impact on the euro-dollar and the
positive Chinese data we have had has helped shares," said ABN
Amro economist Aline Schuiling.
"Draghi signalled quite clearly yesterday that with the rise
in the euro, the risks to price stability are to the downside.
We expect the dollar to continue to strengthen, but if that
reverses then markets would price in a rate cut."
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were up 0.4, 0.45 and 0.2 percent
respectively by 1230 GMT pushing the pan-European FTSEurofirst
300 up 0.6 percent, though it was still on course for
its second consecutive weekly fall.
Draghi said the euro's recent surge was a sign of a return
of confidence, but cautioned: "We certainly want to see whether
the appreciation is sustained and will alter our risk assessment
as far as price stability is concerned."
The common currency was little changed at around $1.3440
, after having fallen 0.9 percent on Thursday in response
to Draghi's comments to briefly touch $1.33705, the lowest level
since Jan. 25.
The yen was the other key focus of foreign exchange
markets following the push by Japan's government to ease
monetary policy, and it rose sharply after the country's finance
minister said the currency's recent drop had been overdone.
The euro fell as much as 1.5 percent against the yen
to 123.54 yen while the dollar shed more than 1
percent to hit a session low of 92.17 yen before both
currencies staged modest recoveries.
HAPPY LUNAR NEW YEAR
Helping to bolster strengthening global growth hopes, China
said its exports grew 25 percent in January from a year ago, the
strongest showing since April 2011 and well ahead of market
expectations, while imports also beat forecasts, surging 28.8
percent on the year.
The prospect for stronger Chinese demand lifted all
industrial commodities, including copper which snapped a
three-day losing streak to gain 0.4 percent to $8,229 a tonne
Brent crude oil edged towards a nine-month high above $118 a
barrel on the robust trade data, which augurs well for
fuel demand, while supply worries stemming from tensions in the
Middle East have also supported prices.
Earlier MSCI's broadest index of Asia-Pacific shares outside
Japan added 0.3 percent and Australian shares
rallied 0.7 percent to 34-month highs on the data.
China's markets are closed next week for the Lunar New Year
holiday, while Hong Kong will resume trading on Thursday.
Despite Friday's gains, MSCI's world equity index
was on course for a weekly fall of nearly one
percent, which would be its biggest drop since November and the
first weekly decline of 2013.
However, the global index is still up four percent for the
year to date and not far from its best levels since mid-2008.
Money markets rates reversed some of their recent
gains following Draghi's insistence that the ECB's policy will
The central bank also said on Friday that banks will return
another 5 billion euros of its crisis loans next week,
suggesting the initial flood of repayments has turned into a
In the bond market, benchmark German Bund futures continued
to push higher as Draghi's cautious tone on the euro zone's
economy underpinned demand for low risk assets.
Nagging concerns about political stability in Spain and
Italy were piling pressure on higher-yielding peripheral bonds
to the benefit of Bunds, overshadowing an Irish bank debt deal
that will cut Dublin's borrowing costs over the next decade.
"On the 10-year Spanish bonds, we could go significantly
above 5.5 percent and reach the 5.6 area and it can be quite
fast," BNP Paribas strategist Patrick Jacq said.
But "On a longer-term view we still expect market friendly
outcomes of the political issues, and the setbacks offer some
opportunities to enter long positions."
Spanish 10-year yields were last at 5.42
percent while equivalent Italian yields were about
1 basis point up at 4.58 percent.