(Adds U.S. market open, NEW YORK dateline, byline)
* MSCI world shares index up 1.44%
* GameStop shares plunge, silver prices tumble
* U.S. stimulus package brightens in Congress
By Herbert Lash and Tom Arnold
NEW YORK/LONDON Feb 2 (Reuters) - Global stock markets
surged for a second day on Tuesday, spurred by increased
optimism about more U.S. stimulus and recovery, while retail
investors retreated from GameStop and their fleeting interest in
silver, causing their prices to tumble.
The party for the trading frenzy mob that pushed GameStop's
stock GME.N up five-fold in a week appeared over as its shares
plunged 46.20% to $121.06. GameStop closed on Friday at $325 a
share after hitting $483 earlier in the session.
Silver prices also fell on Tuesday, sliding -7.52% to
$26.80, after exchange operator CME Group Inc CME.O raised
margins on its COMEX 5000 Silver Futures contract by 17.9% to
their highest since October 2020. CME's move on silver took the air out GameStop too, with
short interest declining to 53% of the stock's available shares
to trade, from 140%, said Tom Hayes, founder and chairman of
hedge fund Great Hill Capital LLC in New York.
"Everyone's rushing for the same narrow exit and trying to
get off margin, and you have a lot of weak sisters that are
coming out of the stock," Hayes said. "The squeeze is over."
Equity markets rallied as investors saw improved prospects
for President Joe Biden's proposed $1.9 trillion COVID-19 relief
package after he met with 10 Senate Republicans to discuss their
scaled-back $618 billion plan. Expectations for Alphabet (NASDAQ:GOOGL)'s Google and Amazon.com earnings
after the bell are high, Hayes said. "Very few people want to be
short going into that type of earnings report, he said.
The Dow Jones Industrial Average .DJI rose 1.99%, the S&P
500 .SPX gained 1.79% and the Nasdaq Composite .IXIC added
1.58%.
Positive momentum overnight in Asia carried through to
Europe, with the pan-European STOXX 600 .STOXX climbing 1.33%.
Initial European Union estimates showed the euro zone
economy contracted less than expected in the fourth quarter of
2020 but is heading for another, probably steeper decline, in
the first quarter of 2021. MSCI's world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 1.50% after posting its strongest
day in three months on Monday.
MSCI's gauge of Asia-Pacific stocks outside Japan
.MIAPJ0000PUS rose 1.4%. China's benchmark CSI300 Index
.CSI300 gained 1.5%, helped by easing concerns about tight
liquidity and declining cases of new coronavirus infections.
Japan's Nikkei 225 .N225 added 1%.
The dollar rose to two-month highs against the euro on a
perceived widening disparity between the strength of U.S. and
European economic recoveries from the coronavirus pandemic.
A sell-off in the euro after coronavirus lockdowns choked
consumer spending in Germany and short-covering in over-crowded
dollar-selling positions also strengthened the greenback.
The euro EUR= was last down 0.31% at $1.2022. The Japanese
yen JPY= weakened 0.16% at 105.08 per dollar.
The Australian dollar pared gains after the country's
central bank said it would extend its quantitative easing
program to buy an additional $100 billion of bonds. The Aussie
last stood at $0.7602 AUD=D4 , off the day's high of $0.7662.
With global market sentiment remaining upbeat about U.S.
fiscal stimulus, core euro zone government bond yields edged up,
with the benchmark German 10-year Bund yield < DE10YT=RR.>
around two basis points higher at -0.492%.
The 10-year U.S. Treasury US10YT=RR note rose 2.4 basis
points to 1.1031%.
Spot gold prices XAU= fell -1.21% to $1,837.74 an ounce.
Oil prices rose more than 2%, reaching their highest in
nearly 12 months after major producers showed they were reining
in output roughly in line with their commitments.
Brent crude futures LCOc1 rose $1.35 to $57.7 a barrel.
U.S. crude futures CLc1 gained $1.38 to $54.93 a barrel.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
EURUSD and CESI https://tmsnrt.rs/3cFk5se
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