* MSCI World Stocks index set for best month on record
* Europe leading with 15% surge
* China official PMI rises to 52.1, tops forecasts
* Dollar and gold out of favour, investors embrace risk
* Oil and industrial commodities lifted by recovery bets
* Sovereign bonds supported by central bank buying
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones and Wayne Cole
LONDON/SYDNEY, Nov 30 (Reuters) - World shares paused on
Monday to assess a record-breaking month as the prospect of a
vaccine-driven economic recovery next year and yet more free
money from central banks eclipsed immediate concerns about the
coronavirus pandemic.
Helping sentiment was a survey showing that factory activity
in China handily beat forecasts in November, and the country's
central bank surprised with a helping of cheap loans.
Chinese blue chips .CSI300 ended lower but up nearly 6%
for the month and, though Europe's traders were reluctant to add
to their bumper November, it was not going to detract from a
record-busting 15% month. .EU
The rush to risk has also benefited oil and industrial
commodities while undermining safe-haven dollar and gold.
"It has been a very, very strong month for markets,
especially on the equity side but also on the fixed income side
too," said Rabobank's Head of Macro Strategy Elwin de Groot.
The positive developments on vaccines and swiftness with
which they are likely to be rolled out had been key drivers.
"And this market still remains very much supported by
liquidity from the central banks," De Groot added. With the ECB
set to provide more stimulus next month "the market view seems
to be, what can possibly go wrong?"
Many European bourses are boasting their best month ever
with France up 21% and Italy almost 26%. The MSCI measure of
world stocks .MIWD00000PUS is up nearly 13% for November,
while the S&P 500 .SPX has climbed 11% to all-time peaks.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS had ended 1.5% lower on the day but was still up
almost 10% for the month.
Japan's Nikkei 225 .N225 eased 0.8%, but was still 15%
higher on the month for the largest rise since 1994. E-Mini
futures for Wall Street's high-flying S&P 500 ESc1 dipped 0.4%
"Markets are overbought and at risk of a short term pause,"
said Shane Oliver, head of investment strategy at AMP Capital.
"However, we are now in a seasonally strong time of year and
investors are yet to fully discount the potential for a very
strong recovery next year in growth and profits as stimulus
combines with vaccines."
Cyclical recovery shares including resources, industrials
and financials were likely to be relative outperformers, he
added.
The surge in stocks has put competitive pressure on
safe-haven bonds but much of that has been cushioned by
expectations of more asset buying by central banks.
Sweden's Riksbank surprised last week by expanding its bond
purchase program and the European Central Bank is likely to
follow in December.
German 10-year Bund yield DE10YT=RR was down 1.1 basis
points at -0.598%, its lowest since Nov. 9. The rest of the core
market also fell by around 1 bp. GVD/EUR
DOLLAR IN DECLINE
Federal Reserve Chair Jerome Powell testifies to Congress on
Tuesday amid speculation of further policy action at its next
meeting in mid-December.
As a result, U.S. 10-year yields are ending the month almost
exactly where they started at 0.84% US10YT=RR , a solid
performance given the exuberance in equities.
The U.S. dollar has not been as lucky.
"The idea that a potential Treasury Secretary (Janet) Yellen
and Fed chair Powell could work more closely to shape and
coordinate super easy monetary policy and massive fiscal
stimulus that could drive a rapid post pandemic recovery saw the
dollar under pressure," said Robert Rennie, head of financial
market strategy at Westpac.
Against a basket of currencies, the dollar index was pinned
at 91.771 =USD having shed 2.4% for the month to lows last
seen in mid-2018.
The euro has caught a tailwind from the relative
outperformance of European stocks and climbed 2.7% for the month
to reach $1.1967 EUR= . A break of the September peak at
$1.2011 would open the way to a 2018 top at $1.2555.
The dollar has even declined against the Japanese yen, a
safe-haven of its own, losing 0.7% in November to reach 103.89
yen JPY= , though it remains well above key support at 103.16.
Sterling stood at $1.3334 GBP= , having climbed steadily
this month to its highest since September, as investors wagered
a Brexit deal would be brokered even as the deadline for talks
loomed ever larger. One major casualty of the rush to risk has been gold, which
was near a five-month trough at $1,771 an ounce XAU= having
shed 5.6% in November.
Oil, in contrast, has benefited nearly 30% from the prospect
of a demand revival should the vaccines allow travel and
transport to resume next year. O/R
Some profit-taking set in early on Monday ahead of an OPEC+
meeting to decide whether the producers' group will extend large
output cuts. Brent crude LCOc1 futures fell 52 cents to
$47.66, while U.S. crude CLc1 eased 60 cents to $44.93 a
barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Global markets have a November to remember https://tmsnrt.rs/2VgAgCB
Emerging market stocks' November to remember https://tmsnrt.rs/33lYqQq
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