* China exports rise 3.5% y/y vs forecast -15.7%
* European stocks up choppy Asian session
* U.S. jobs data awaited
* Long-term U.S. yields lifted by tidal wave of new debt
* Turkey's lira slumps to record low
By Marc Jones and Wayne Cole
LONDON/SYDNEY, May 7 (Reuters) - World shares climbed on
Thursday after Chinese exports proved far stronger than even
bulls had imagined, while bond investors were still daunted by
the staggering amount of U.S. debt set to be sold and a tussle
over ECB bond buying.
Beijing reported exports rose 3.5% in April on a year
earlier, completely confounding expectations of a 15.1% fall and
outweighing a 14.2% drop in imports. The surprise stoked speculation the Asian giant could
recover from its coronavirus lockdown quicker than first thought
and support global growth in the process.
The news had helped Japan's Nikkei .N225 and Seoul's Kopsi
.KS11 recover from shaky starts and Europe's main London
.FTSE , Paris .FCHI and Frankfurt .GDAXI bourses all made
0.4%-0.7% early gains. .EU
E-Mini futures for the S&P 500 ESc1 fared better with a
bounce of 1.2%, though there were ominous signs too. Turkey's
lira fell to a record low amid worries about its dwindling
reserves, oil was back under $30 a barrel and Italy's bond
yields hit 2% again. GVD/EUR O/R
"It's clear that this virus has gone from east to west and
we are now seeing that in the data," said Societe Generale's Kit
Juckes pointing to the China numbers and relatively better
purchasing managing data in countries such as Australia.
But with the full economic impact of COVID-19 still to be
known and huge amounts of debt potentially pushing up borrowing
costs "the market is hugely split between die hard bears and
buy-on-dip buyers", he added.
Markets had traded cautiously overnight with renewed
Sino-U.S. tensions lurking in the background.
U.S. President Donald Trump said he would be able to report
in about a week or two whether China is meeting its obligations
under a trade deal, as Washington weighed punitive action
against Beijing over its handling of the coronavirus outbreak.
The flow of economic data also remained grim, with U.S.
private employers laying off 20 million workers in April and a
Bank of England warning that the coronavirus crisis could cause
the country's biggest economic slump in 300 years.
Figures due later on Thursday are forecast to show initial
U.S. jobless claims rose a further 3 million last week, while
Friday's payrolls report is expected to see 22 million jobs lost
and unemployment hit 16% or higher.
"Despite their dizzying rally, we continue to be cautious on
equities in the near term," Luca Paolini, chief strategist at
asset manager Pictet said. "Markets seem to be overestimating
the speed of economic recovery."
WORLD'S BIGGEST BORROWER
Bond markets saw one of the largest shifts in a while after
the U.S. Treasury said it would borrow an astonishing $2.999
trillion during the June quarter, five times larger than the
previous single-quarter record. US/
It will sell $96 billion next week alone and a surprising
amount of that will be at longer tenors, which in turn pushed up
long-term yields and steepened the curve.
Yields on 30-year bonds US30YT=RR jumped 7 basis points to
1.40%, the largest daily increase since mid-March, while rise in
Italy's yields to over 2% reflected worries caused by a German
court ruling this week targeting the European Central Bank's
bond purchase programme. France and Spain were also due to sell up to a combined
18.75 billion euros ($20.3 billion) of bonds following Germany's
first syndicated bond since 2015, which raised 7.5 billion euros
on Wednesday alongside a 3.2 billion auction.
The rise in U.S. yields gave a lift to the U.S. dollar on
most currencies and its index firmed to 100.192 =USD . The euro
drooped below $1.08 EUR= , hurt too by a gloomy economic
outlook from the European Commission. Indeed, the single currency sank to its lowest against the
Japanese yen since late 2016 at 114.40 EURJPY= , and even the
dollar touched a seven-week trough at 105.98 yen JPY= .
"There's a lot to like about the yen these days," said
Deutsche Bank's global head of G10 FX Alan Ruskin.
He noted that with rates across the globe falling to all
time lows, the yen no longer had a large yield disadvantage.
"Across all of 3m, 2y, 5y and long-end tenors, the average
spread between yen rates and the average of G10 yields are at
lows not seen for at least the last three decades," he said.
The yen was also cheap by many measures, he argued, with
fair value put at around 85 per dollar.
In commodity markets, gold had eased on expectations that
supplies will grow as bullion refineries resume operations. The
metal was last up 0.3% at $1,691.54 an ounce XAU= . GOL/
Oil prices were slipping back though after a six-session
streak of gains which saw Brent almost double since hitting a
21-year low in April. O/R
Brent crude LCOc1 futures were last down 14 cents at
$29.59 a barrel, while U.S. crude CLc1 eased 19 cents to
$23.85.
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