(Adds U.S. market open, byline; changes dateline; previous
LONDON)
* China says trade deal would see tariffs removed in phases
* Wall Street sets intraday record highs
* European stocks at a more than 4-year high
* Safe haven bonds sag as market optimism returns
* Dollar gains against safe-haven Japanese yen, Swiss franc
By Herbert Lash
NEW YORK, Nov 7 (Reuters) - Oil prices rose and global
equity markets rallied on Thursday after China said it has
agreed with the United States to cancel tariffs in phases, a key
consideration in reaching an initial deal to end a trade war
that has crimped economic growth.
Wall Street's three main stock indexes hit record intraday
highs and a gauge of worldwide equity performance surged to a
21-month peak, with a pan-European index at its highest since
July 2015.
The dollar gained after comments from a Chinese commerce
ministry spokesman about the terms of a potential trade deal
prompted investors to dump perceived safe-havens such as the
Japanese yen, the Swiss franc, bonds and gold. No timetable was indicated, but a "phase one" deal is widely
expected to include a U.S. pledge to scrap tariffs scheduled for
Dec. 15 on about $156 billion worth of Chinese imports,
including cell phones, laptop computers and toys.
The news from China is definitely positive, but in a slowing
economy with operating earnings trending lower year over year,
"the fundamental justification for this market increase is
pretty weak," said David Kelly, chief global strategist at
JPMorgan Funds in New York.
Investors have few options outside of equities, with the
return in money markets and long-term government debt below the
rate of inflation, Kelly said. The economy is generating plenty
of wealth but it is all going to the stock market, he said.
"The real driver (of the market rally) is that investors in
the United State and around the world have got little
alternatives available to them because of the actions of the
central banks," Kelly said, "so they're funneling money into
stocks."
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.45%, while the pan-European STOXX 600 index .STOXX
rose 0.39%.
Asia had been quiet overnight, and the China news came just
before European markets opened. Automakers .SXAP and miners
.SXPP were among Europe's top gainers.
On Wall Street, the Dow Jones Industrial Average .DJI rose
239.49 points, or 0.87%, to 27,732.05. The S&P 500 .SPX gained
17.65 points, or 0.57%, to 3,094.43 and the Nasdaq Composite
.IXIC added 62.89 points, or 0.75%, to 8,473.52.
The global benchmark for crude climbed above $62 a barrel.
Brent crude LCOc1 rose 56 cents to $62.30 and West Texas
Intermediate CLc1 added 89 cents to $57.24 a barrel.
The dollar rose to near three-month highs versus the yen on
the trade news, paring losses earlier in the session, while
Australia's China-sensitive dollar hit a near four-month high.
The dollar index .DXY rose 0.24%, with the euro EUR=
down 0.26% to $1.1036. The yen JPY= weakened 0.38% versus the
greenback at 109.41 per dollar, while the dollar gained against
the Swiss currency CHF= , trading up 0.24% at 0.9950 franc.
U.S. Treasury yields rose to eight-week highs.
The benchmark 10-year U.S Treasury note US10YT=RR fell
33/32 in price to push its yield up to 1.9242%.
Gold fell, with spot gold XAU= trading down 0.37% at
$1,469.90 an ounce.
"Global markets in general are looking toward where trade
goes," said Justin Lederer, an interest rates strategist at
Cantor Fitzgerald in New York. "The market is being dictated by
headlines and it's risk on, risk off."
Copper got its customary lift from the China optimism as the
country is the biggest buyer of the metal.
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
World stocks surge $10 in 2019 https://tmsnrt.rs/2JRIM5J
German yields https://tmsnrt.rs/36JT6GA
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