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1 of 9. An employee of the Tokyo Stock Exchange (TSE) works at the bourse in Tokyo June 13, 2013.
Credit: Reuters/Toru Hanai
LONDON |
LONDON (Reuters) – World shares pushed up towards five-year highs on Tuesday helped by China’s plans for avoiding a hard landing in its slowing economy, while gold took a breather after its biggest one-day gain in more than a year.
Local media in China reported that the government is looking to increase investment in railway projects as it aims to ensure annual economic growth does not sink below 7 percent.
The reports saw China shares post their best day in two weeks .CSI300, driving MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 1.3 percent to its highest since early June.
European shares added to their recent gains on hopes that China’s plan would boost demand for construction materials, climbing 0.4 percent in early trade .FTEU3 with the focus expected to switch to corporate earnings reports.
“Earnings have also been relatively good so far, although the bulk of results still has to come. We’ll have a better idea of the big picture by the end of the week,” said David Thebault, head of quantitative sales trading at Global Equities.
An upgraded economic outlook from Japan’s government added to the better tone in the markets, lifting Tokyo’s Nikkei .N225 0.8 percent, sending the MSCI world equity index .MIWD00000PUS up 0.2 percent to within touching distance of the five-year high hit at the end of May.
Expectations Japan will stick with its expansionary policies after the government’s victory in weekend elections also supported the yen, which hit a one-week peak against the dollar at 99.13 yen before settling back to 99.51 yen.
The greenback has been softer against many major currencies, giving an extra shine to gold, as concerns of an imminent reduction in the Federal Reserve’s bond-buying stimulus ease.
Gold eased off from its recent gains, up just 0.1 percent to $ 1,336.84 an ounce. The precious metal has now recovered nearly $ 160 from a three-year low of $ 1,180.71 an ounce hit on June 28.
In emerging markets, traders were watching Turkey, where the central bank will decide whether to raise interest rates to shore up the lira after burning through its foreign exchange reserves in a desperate bid to shore up the currency.
(This story was refiled to correct grammar in headline to say “send” not “sends”)
(Additional reporting by Blaise Robinson; Editing by Hugh Lawson)
Comments (1)
China plans send world shares higher, gold pauses
China is in gold buying frenzy. Physical deliveries at Shanghai Gold Exchange this year were 1200 tons, imports from Hongkong 500+ tons. They also have domestic production of 400 tons. Public can’t buy such amounts of gold for jewellery and investment. Only 1H 2013 apparent consumption will be enough to buy 2 rings to every Chinese lady. PBOC is buying in a diversification out of USD and EUR assets. With 3,4 trillion reserves, 10% diversification means 8000 tons (or 260 million oz if you don’t like metric system).
The next step will be change of reserve currency from USD to RMB, not now, but in 10-15 years.
I like US dollar, we can live with US hegemony, it is only 300 million people with insatiable resources demand. We do not know what insatiable resources demand of 1400 milion means.
FED can choose when to taper and everybody is listening, but sometimes around 2020 nobody would care so at maximum 10 years of zero interests rates fantasy.