NEW YORK (Reuters) - Stock markets worldwide rose on Monday and the euro climbed to a six-week high against the dollar after encouraging trade and inflation data from China, but uncertainty about the outlook for U.S. monetary policy limited moves.
Solid data from the United States and China has boosted confidence that the global economy is recovering well enough to withstand a scale-back in stimulus by the Federal Reserve, with investors focused on clues about the timing of action.
The Fed will begin trimming its monthly asset purchases in March, a Reuters poll showed on Monday, but some economists are warming up to the idea that it will do so as early as this month or at the January policy meeting. The U.S. central bank next meets on December 17-18.
St. Louis Fed President James Bullard, who is a voting member on the Fed’s policymaking committee this year, said Monday the Fed could slightly reduce its monthly bond purchases this month in reaction to signs of an improved labour market.
Dallas Federal Reserve Bank President Richard Fisher said the U.S. central bank should start to trim its massive bond-buying program next week. Richmond Fed President Jeffrey Lacker said further monetary stimulus is unlikely to do much to help the U.S. economy and the risks of pressing ahead with the policy outweigh the benefits.
“There is no question: at some point, there is tapering. Whether that is December or March or June, it’s coming. All the Fed-speak helps the market get prepared for that,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
The MSCI world equity index, which tracks shares in 45 countries, rose 0.4 percent.
China’s exports handily beat forecasts in November, adding to evidence of a stabilization in the world’s second-largest economy, while an unexpected drop in consumer inflation eased fears of any imminent policy tightening.
“The strong labour data out of the U.S. and the robust trade balance numbers from China suggest that global growth may be better than the consensus view,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
The Dow Jones industrial average closed up 5.33 points, or 0.03 percent, at 16,025.53. The Standard & Poor’s 500 Index gained 3.28 points, or 0.18 percent, to 1,808.37. The Nasdaq Composite Index rose 6.23 points, or 0.15 percent, to 4,068.75.
European shares ended up 0.2 percent, while Tokyo’s Nikkei climbed 2.3 percent.
The benchmark 10-year U.S. Treasury note was up 9/32, the yield at 2.848 percent.
The euro rose as high as $1.3745, according to Reuters data, as short-term interest rates in the euro zone money market edged up after the European Central Bank last week dented speculation of any imminent easing.
Against the yen, the euro climbed to 141.93 yen, reaching highs not seen since October 2008. It was last trading at 141.88, up 0.6 percent on the day.
The dollar gained 0.4 percent to 103.27 yen, having risen to 103.32 yen, not far from the six-month peak of 103.37 set last Tuesday. The yen continued to underperform on the Bank of Japan’s ultra-loose monetary policy and the pick-up in risk appetite.
Strong Chinese data helped lift copper prices, while spot gold rose to $1,240 an ounce from $1,228.24.
Brent futures settled $2.22 a barrel lower at $109.39 as well-supplied markets and limited demand from European refiners pushed prices lower. U.S. crude ended 31 cents lower at $97.34.
Emerging market attention remained on Thailand after Prime Minister Yingluck Shinawatra called snap elections in an attempt to defuse the country’s tensions. The Thai baht rose almost 1 percent versus the dollar only to slide along with Bangkok shares as anti-government protest leaders vowed to fight on.
Additional reporting by Gertrude Chavez-Dreyfuss and Angela Moon in New York and Marc Jones in London; Editing by Dan Grebler and James Dalgleish