* European stocks edge higher, following Asian lead
* Gold, oil, yen also fall as MidEast worries ease
* Investors prepare for U.S. payroll data due later
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Jan 10 (Reuters) - World stocks set new record highs
on Friday and the prices of safe-haven assets such as gold
pulled back as investors cheered an apparent de-escalation in
U.S.-Iran tensions and looked instead to prospects of improved
global growth.
Markets have swiftly reversed the sharp falls seen at the
start of the week after the United States killed Iran's most
senior general, believing it would not lead to a full-scale
military confrontation that would rock investor confidence.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, has quickly resumed its rally and added
another 0.1% on Friday to hit a new record high. It is almost
1.5% above the lows seen on Monday.
European shares were mixed at the open, with pan-European
Euro Stoxx 50 .STOXX50E down 0.16%, the German DAX .GDAXI up
0.06% and Britain's FTSE .FTSE 0.1% ahead.
That followed record levels in the three major share indexes
on Wall Street on Thursday. Stock markets have got off to a
strong start in 2019 despite U.S. President Donald Trump's
decision to kill military commander Qassem Soleimani, the second
most powerful figure in Iran, in a missile strike in Baghdad.
FULL CIRCLE
"In the space of a few days we appear to have swung full
circle; with investors seemingly convinced that the problems in
the Middle East appear to have settled down, at least for the
time being," said Michael Hewson, chief markets analyst at CMC
Markets.
"Investors now have the opportunity to focus on the signing
of the new U.S.-China phase one trade deal next week, as well as
the health of the U.S. economy today, and in particular the
labour market which has continued to look resilient," he added,
referring to all-important U.S. non-farm payrolls data due at
1330 GMT.
While markets judge the United States and Iran to be making
moves to defuse the tensions, investors also welcomed news that
sales of Apple's iPhones in China in December jumped more than
18% on the year.
Investors digested the report as a prelude to the upcoming
visit by China's Vice Premier Liu He, head of the country's
negotiation team in Sino-U.S. trade talks, to Washington next
week to sign a trade deal with the United States. There were other signs of investors' bullish mood too.
MSCI's emerging market currency index .MIEM00000CUS ,
although little changed on Friday, hit 1-1/2-year highs on
Thursday in what is likely to be its sixth straight week of
gains as it has also benefitted from three U.S. rate cuts last
year.
Safe haven assets extended their downward move.
Gold XAU= eased 0.1% to $1,550 per ounce from a seven-year
high of $1,610.90 hit right after Iran's missile attack on
Wednesday.
Against the Japanese yen, which investors often buy in times
of uncertainty, the U.S. dollar strengthened to a two-week high
of 109.61 yen JPY= .
The dollar was little changed more broadly .DXY and
against the euro it stood at $1.1108 EUR= . The euro fell to
$1.1091 on Thursday, its lowest in about two weeks.
Oil prices, which spiked earlier this week on worries that
tensions with Iran would disrupt global supplies, retreated
further.
Brent crude LCOc1 fell 0.3% $65.20 a barrel, and was
heading for its first decline in six weeks, down almost 5%.
U.S. crude oil CLc1 dropped 0.4% to $59.33 a barrel and
was also on track for its first weekly drop in six, falling 6%
from last Friday's close.
Government bond yields, which rose on Thursday as investors'
nerves about the situation in the Middle East eased, edged lower
in early trading on Friday.
The benchmark 10-year German bond yield DE10YT=RR fell 1
basis point to -0.236% but for the week remains up almost 5
basis points, in a strong signal of investors' willingness to
pull back from safe-haven government debt for riskier assets.
The 10-year U.S. Treasury yield US10YT=RR slipped 1 basis
point to 1.849% but it too remains up 6 basis points on the
week.
"Unless we have external shocks such as a resurgence of
U.S.-China trade tensions or a war in the Middle East, it is
hard to see the U.S. economy falling apart," said Hiroshi
Watanabe, senior economist at Sony Financial Holdings.
"There could be a great rotation to stocks from bonds.
Emerging markets are likely to benefit from investors' bullish
mood too," he added.
MSCI World Equity Index https://tmsnrt.rs/2NdTxAT
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