Global stocks surge to 18-month high

Updated 12 December 2012
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Global stocks surge to 18-month high

NEW YORK: US stocks advanced and European shares rallied to an 18-month high yesterday after
German investor sentiment rose sharply in December and on expectations the Federal Reserve will keep pumping money into the US economy.
The euro gained versus the dollar, as investors steered clear of the US currency ahead of the Fed's meeting yesterday and today, while US government bond prices fell.
Morale among German analysts and investors improved sharply in December, jumping to 6.9 against expectations of -12.0, fanning hopes that Europe's largest economy will avoid recession this winter.
"We've been getting a lot of the beginning of our day from seeing what Europe has been doing and I think that's going to hold true today," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
The lack of progress in negotiations about the US "fiscal cliff" has kept investors from making aggressive bets in recent weeks, though most expect a deal will eventually be reached.
While the pace of talks in Washington to avert impending US tax hikes and spending cuts quickened, senior politicians on both sides cautioned that an agreement on all the outstanding issues remained uncertain.
The Dow Jones industrial average gained 61.56 points, or 0.47 percent, to 13,231.44. The Standard & Poor's 500 Index rose 7.13 points, or 0.50 percent, to 1,425.68. The Nasdaq Composite Index added 23.71 points, or 0.79 percent, to 3,010.67.
The FTSEurofirst 300 index rose 0.3 percent to 1,138.14 points, having hit its strongest since June 2011. The MSCI global stock index edged up 0.5 percent to 336.51 points.
The US central bank is expected to announce a new round of Treasury securities purchases at the end of its meeting today, according to a Reuters poll. The program would replace its "Operation Twist" stimulus, which expires at the end of the year.
Many economists believe the Fed will announce monthly bond purchases of $ 45 billion, although some think it could be more.
"We anticipate the Fed will announce Treasury purchases and as that depresses yields it will have a negative impact on the dollar and that supports the euro," said Jane Foley, senior currency strategist at Rabobank.
The euro rose 0.4 percent to $ 1.2989, while the dollar was little changed at 82.34 yen.
Markets had been rattled on Monday by Italian Prime Minister Mario Monti's announcement he would step down some weeks early.
But the upbeat ZEW data helped lift shares and the euro from their gloom.
Expectations of more easing drove the dollar index down 0.3 percent, and pushed the Canadian dollar to a two-month high, while the New Zealand dollar hit a nine-month high of $0.8369.
Benchmark 10-year Treasury notes were trading 9/32 lower in price to yield 1.65 percent, the highest in over a week and up from 1.63 percent late Monday. Investors were also
pushing for price concessions heading into $ 66 billion of US government debt auctions this week.
In the oil market, Brent crude rose 52 cents to $ 107.85 a barrel after OPEC said its production declined in November, while a weaker dollar and Middle East unrest also supported prices.
US crude gained 19 cents to $ 85.75.
Gold was steady near $ 1,710 an ounce, with more US stimulus expected to support gold's appeal as a hedge against inflation.


IMF warns G20 economic leaders that tariffs hurting global economy

Updated 22 July 2018
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IMF warns G20 economic leaders that tariffs hurting global economy

BUENOS AIRES: The International Monetary Fund (IMF) warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after US President Donald Trump threatened a major escalation in a dispute with China.
IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade.
“It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures...is in the range of 0.5 pct of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.
Her warning came shortly after the top US economic official, Treasury Minister Steven Mnuchin, told reporters in the Argentine capital there was no “macroeconomic” effect yet on the world’s largest economy.
Long-simmering trade tensions have burst into the open in recent months, with the United States and China — the world’s No. 2 economy — slapping tariffs on $34 billion worth of each other’s goods so far.
The weekend meeting in Buenos Aires comes amid a dramatic escalation in rhetoric on both sides. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.
US Treasury Secretary Steven Mnuchin will try to rally G7 allies over the weekend to join it in more aggressive action against China, but they may be reluctant to cooperate because of US tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures. .
The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to “further dialogue.”
German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.
“I don’t expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.
Mnuchin told reporters on Saturday that he has not seen a macroeconomic impact from the US tariffs on steel, aluminum and Chinese goods, along with retaliation from trading partners.
But he said there have been microeconomic effects on individual businesses, he said, adding that the administration was closely monitoring these and looking at ways to help US farmers hurt by retaliatory tariffs.
The US dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest level in a year.