GLOBAL MARKETS-Shares start month on a high as PMIs point to economic rebound

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LONDON, Sept 1 (Reuters) - Stocks started September on a
positive note, with global indexes close to all-time highs and
Europe edging higher, pushed up by Chinese factory data that
showed a rebound in demand.
Factory activity in China expanded at the fastest rate in
nearly a decade in August, a private PMI survey showed on
Tuesday, contrasting with an official survey on Monday that
showed output in the country's factories grew slightly more
slowly last month as floods hit the southwest. Both surveys pointed to improving export orders.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was close to its highest ever, while the
pan-European Stoxx 600 was up 0.2% at 0809 GMT.
France's Cac 40 was up 0.4% .FCHI and Germany's Dax
.GDAXI was up 0.6%. Britain's FTSE 100 lagged, down 0.9%
.FTSE .
European stocks had opened even higher but pared gains after
the German government revised down its GDP forecast for 2021.
PMI data from across Europe showed manufacturing activity
generally on the path to recovery though factory managers are
wary about investing and hiring more workers. In Germany, Europe's largest economy, output grew at its
fastest pace since February 2018, while in France it contracted.
The euro zone economy has experienced a strong recovery in
the third quarter even though the most recent incoming data have
been less robust, European Central Bank Vice President Luis de
Guindos said. The euro rose to a two-year highs of $1.19975 at 0324 GMT.
At 0800 GMT it was at $1.199, up 0.4% since New York's close, as
a dollar sell-off continued EuR=EBS .
Versus a basket of currencies the dollar was down 0.4% at
91.8811 at 0810 GMT, dropping below 92 for the first time since
May 2018 =USD .
Investors are betting on U.S. rates staying lower for longer
after Federal Reserve Chair Jerome Powell on Thursday outlined
an accommodative shift in the central bank's approach to
inflation. Euro zone inflation data for August is due at 0900 GMT and
is expected to show a decline to 0.2%, according to a Reuters
poll.
Commerzbank analyst Esther Reichelt said inflation data
highlights the difference between the Fed and the ECB.
"Whereas the market considers the Fed capable of rekindling
inflation rates by leaving interest rates lower for longer than
previously assumed, this does no longer seem to be the case as
far as the ECB is concerned," she wrote in a note to clients.
"Inflation data for August published today will once again
underline by how much the ECB will miss its inflation target.
"Just as higher inflation is damaging for the dollar, the
euro is benefiting from lower inflation – if monetary policy is
unwilling (or unable) to do anything against it."
Paul Donovan, chief economist at UBS Global Wealth
Management said Tuesday's data was likely to have limited impact
because "markets are convinced interest rates will remain low
for longer, and price data is unlikely to change that."
Core euro zone bond yields were up around 1 to 2 basis
points, with the benchmark German 10-year yield at -0.386%
DE10YT=RR .
Oil prices gained, reversing overnight losses. Brent crude LCOc1 futures climbed 57 cents to $45.85 a
barrel at 0805 GMT. U.S. West Texas Intermediate (WTI) crude
CLc1 futures rose 56 cents to $43.17 a barrel.
Gold prices also rose, to their highest in two weeks XAU= .
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