Global markets extend gains, stronger dollar pressures gold

As concerns regarding slowdown in global economy continue, accurate data from biggest economies in world cheer up markets in last trading day of this week

Photo by: Reuters
Photo by: Reuters

A man walks past a panel displaying figures of China stock indexes and Hang Seng Index at the financial Central district in Hong Kong, September 2, 2015

Europe extended a global share market rebound on Friday, following Asian and US stock indexes higher after stronger US data helped allay fears about global growth and sent world stocks to two-month highs.

The pan-European FTSEurofirst 300 rose 0.9 percent, up for a second straight session to recoup losses made earlier in the week after weak data from China.

That helped the MSCI World Index to rise to its highest level since August 21. Up 6 percent so far in October, it is set for its best month since 2011.

Asian and European shares followed Wall Street higher after new applications for unemployment benefits fell back to a 42-year low last week. This suggested the labor market remained strong even though recent jobs data releases have sent mixed signals.

Core inflation data also showed some signs that price pressures are beginning to build up again, although the Fed has been in no rush to raise rates, expressing concerns that the slowing global economy, particularly in China, might pose a threat to the US economic outlook.

Rekindled rate-hike expectations lifted the dollar. The dollar index, which values the greenback against a basket of six major counterparts, was up 0.3 percent at 94.681.

The dollar rose 0.2 percent to buy 119.08 yen after pulling away from a 7-week trough of 118.065 struck overnight, but was still poised to lose 1 percent this week.

The data and the stronger dollar pushed gold into retreat from a 3-1/2-month high.

Chinese stocks rose to seven-week highs, pushing main indexes to their strongest weekly performance in four-and-a-half months after data showed Chinese loans surged in September.

Investors remained cautious before data on Monday that is forecast to show the world's second-largest economy slowing to a 6.5 percent growth pace in the third quarter, falling below 7 percent for the first time since the global financial crisis.

Annual inflation in the eurozone turned negative in September due to sharply lower energy prices, data confirmed on Friday, maintaining pressure on the European Central Bank to increase its asset purchases to boost prices.

The euro was slightly lower at $1.1364 after sliding from a 7-week peak of $1.1495 scaled the previous day when ECB governing council member Ewald Nowotny said it was "obvious" the central bank must seek more ways to stimulate the euro zone economy. The euro was on track to end the week effectively flat.

Oil prices snapped a week-long decline that pushed prices down nearly 10 percent, with some investors pinning hopes on forecasts of falling US shale oil production.

US crude was up 1.3 percent at $46.98 a barrel, after shedding 0.6 percent on Thursday. Brent added 0.9 percent to $50.17.