GLOBAL MARKETS-Stocks rally on vaccine hopes, oil gains crude drawdown

* COVID vaccine hopes drives risk-on sentiment
* Economic, crude oil data help growth outlook
* Simmering U.S.-Sino tensions remain a concern

By Herbert Lash and Marc Jones
NEW YORK/LONDON, July 15 (Reuters) - World shares strode to
four-month highs on Wednesday as hopes for a coronavirus vaccine
offset rising U.S.-China tensions and helped lift the euro and
oil prices too.
Asian markets were choppy after more barbs between Beijing
and Washington over Hong Kong but gains of around
2% in European bourses and a solid advance on Wall Street set
aside concerns about the still growing number of COVID cases.
An experimental vaccine produced by Moderna Inc MRNA.O
drew safe immune responses in all 45 healthy volunteers, an
early stage trial showed on Tuesday. There were
reports on Wednesday that a separate University of Oxford trial
was also looking good. U.S. Treasury yields rose and the yield curve steepened,
indicating a wider spread between long- and short-term interest
rates, as vaccine hopes boosted risk appetite and surprising
data released on Wednesday added to the optimism.
U.S. industrial production, manufacturing output and plant
capacity rose more than expected in June and there was a bigger-
than-expected draw in U.S. crude and refined products last week.
"The market is trading fairly 'risk on' on vaccine hopes,"
said Gennadiy Goldberg, an interest rate strategist at TD
Securities in New York. "It's largely COVID news driving the
price action recently."
Europe's broad FTSEurofirst 300 index .FTEU3 advanced
1.78%, while on Wall Street, the Dow Jones Industrial Average
.DJI rose 0.74%, the S&P 500 .SPX gained 0.66% and the
Nasdaq Composite .IXIC added 0.13%.
Moderna surged 10.2% to a record high after a small-scale
study showed its experimental vaccine produced high levels of
virus-killing antibodies, bolstering hopes it could prove
effective in later stages of testing. Hopes of progress this week towards a deal on the European
Union's 750 billion-euro COVID recovery fund helped
sentiment in Europe. The euro traded above $1.1430 EUR= for
the first time since March, and Italy and Spain's bond market
borrowing costs came down again. .EU /FRX GVD/EUR
The euro EUR= was last up 0.18% at $1.1416.
Chinese shares fell 1.3% .CSI300 and Hong Kong .HSI
ended flat, after U.S. President Donald Trump ordered an end to
Hong Kong's special status under U.S. law to punish China for
its "oppressive actions" against the former British colony.
That prompted a retaliatory warning from China's foreign
ministry that "Hong Kong affairs are purely China's internal
affairs and no foreign country has the right to interfere".

Japan's Nikkei .N225 and Australia's benchmark index
remained upbeat, finishing up 1.6% and 1.9%, respectively.
Investment bank Goldman Sachs GS.N was also pointing
higher after reporting higher quarterly profits following the
COVID crisis trading boom. JPMorgan, Citi and Wells Fargo had
reported huge Q2 profit drops on Tuesday and set aside a
collective $28 billion for loan losses. RED ALERT
The dollar was on the defensive, particularly against
risk-sensitive currencies, following the news of progress in
vaccine development. /FRX
Sweden's crown SEK= vaulted to its highest versus the
greenback since February 2019 and the risk-sensitive Australian
dollar popped to a one-month high at $0.70 AUD=D4 .
The yen JPY= was down 0.29% at $106.9200.
The Bank of Japan kept its monetary policy steady, as
expected, on Wednesday though it warned that uncertainty over
the economic outlook was "extremely high" due to various risks,
including rising coronavirus infections in Tokyo, which was put
on "red alert" on Wednesday. Oil rose on the sharp drop in U.S. inventories, but further
gains were limited as the Organization of the Petroleum
Exporting Countries and allies are set to ease supply curbs from
August as the global economy recovers from the pandemic.
Brent crude LCOc1 rose 1.1% at $43.37 a barrel. U.S. crude
CLc1 advanced 1.04% at $40.71 a barrel.

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