* Global shares reach record highs on trade optimism
* European shares set for best year since financial crisis
* Fourth-quarter earnings will come into focus in January
* Euro rises as speculators unwind
* Brent crude at three-month highs
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tom Arnold
LONDON, Dec 27 (Reuters) - World stocks scaled record highs
on Friday and oil prices stayed buoyant in a holiday-shortened
week, as optimism grew that a U.S.-China trade deal would soon
be signed.
Traders returned from their Christmas and Boxing Day break
to digest comments from Beijing that it was in close contact
with Washington about an initial trade agreement. Earlier, U.S.
President Donald Trump had talked up a signing ceremony for the
recently struck phase-one trade deal. Rising to another record high, European shares were on
course for their best year since the financial crisis. The
pan-European STOXX 600 index .STOXX was up 0.2%, helped by
gains in export-heavy German shares .GDAXI . The benchmark
index has reached record highs for three sessions in a row.
The FTSE 100 .FTSE , set for its best run in three years,
added 0.4%. Mining companies .FTNMX1770 provided the biggest
boost, with Glencore Plc GLEN.L and BHP Group Plc BHPB.L
climbing about 2% each.
The positive tone was set in Asia. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS jumped 0.8% to
555.39, a level not seen since mid-2018. It is up 15.5% so far
this year.
China's blue-chip CSI300 .CSI300 was down 0.1%, although
for the week the index was up 0.1%.
Profits at industrial companies in China in November grew at
the fastest pace in eight months, breaking a three-month
declining streak, as production and sales quickened. But broad
weakness in domestic demand remains a risk for earnings next
year, say analysts. The rally in global shares contrasts with a plunge late last
year, when the Sino-U.S. trade war had sapped investor
confidence. The worries scuttled capital expenditure plans over
much of 2019, but strong employment and signs of an improving
global economy suggest that will change next year.
The U.S. Federal Reserve's policy easing, economic data that
have come in above expectations, and corporate profits have
helped lift stocks this year, along with trade-related optimism.
Markets are now waiting for January's fourth-quarter financial
results to see whether sentiment among companies has improved.
But some analysts are wary about risks ahead in 2020.
"The trade war ... is far from over," Piotr Matys, FX
strategist at Rabobank, wrote in a research note. "In our view,
this is just a temporary truce. Another unsolved major issue is
Brexit. Geopolitical risk can suddenly resurface."
STERLING STRONGER, OIL SURGES
Easing uncertainty about Britain's exit from the European
Union helped sterling gain to a four-day high of 85.17 pence
against the euro EURGBP=D3 .
The rise was helped by European Commission President Ursula
von der Leyen's saying the EU may need to extend the deadline
for talks about a new trade relationship with Britain.
After being battered during 2019 by hedge funds betting on
its weakening, the euro EUR=EBS rose on Friday to an eight-day
high of $1.1142. Against the Japanese yen, the U.S. dollar showed some
weakness, falling 0.2% to 109.48 yen JPY=EBS . But the dollar
was not far off the six-month high of 109.73 yen it reached at
the beginning of this month.
The trade-sensitive Aussie dollar AUD=D3 rose as high as
$0.6958 against its U.S. counterpart, a five-month high.
Oil prices hit three-month highs. Brent crude LCOc1 , the
global benchmark, rose to $68.14 per barrel, extending gains for
a fourth session. U.S. West Texas Intermediate CLc1 gained 22
cents to $61.90 a barrel. O/R Brent has rallied about 25% in
2019, supported by supply cuts in oil-exporting countries
Gold prices XAU= eased from a near two-month high hit
earlier in the session as investors booked profits amid thin
holiday trade. It was still on course for its biggest weekly
gain since early August. Spot gold was 0.01% down to $1,510.80
per ounce. GOL/