* World shares inch closer to record peak, up 0.3%
* Yellen calls regulator meeting on GameStop volatility
* Italian assets shine on prospect of Draghi becoming PM
* Silver rebounds, Brent crude prices at 11-month high
(Updates prices, adds detail)
By Danilo Masoni
MILAN, Feb 3 (Reuters) - World shares rose on Wednesday as
volatility caused by a retail trading frenzy on Wall Street
subsided on expectations of tougher regulation, while optimism
about U.S. fiscal stimulus also supported sentiment.
The prospect of former ECB chief Mario Draghi becoming prime
minister in Italy added to the cheer, along with record sales at
Google parent Alphabet which offset an initial tepid reception
to news that Amazon founder Jeff Bezos will step down as CEO.
The MSCI world equity index .MIWD00000PUS was up 0.3% by
1300 GMT, rising for a third straight session and inching closer
to its record peak, driven by gains in Asia overnight and a
positive session across Europe.
World shares recovered from wild swings last week when a
Reddit-driven trading fever boosted heavily shorted stocks like
GameStop, forcing hedge funds to reduce their equity books.
Investors were bracing for tougher U.S. market regulation
after Treasury Secretary Janet Yellen asked to discuss whether
trade had been consistent with fair and efficient markets.
Officials were set to meet as soon as Thursday. ID:nL1N2K904H
"Regulators have acknowledged the tumult," Deutsche Bank
strategists led by Jim Reid said in a note.
Mass buying by amateur investors had lifted GameStop, the
U.S. videogame retailer at the core of the frenzy, tenfold
before the shares started deflating. In pre-market trade on
Wednesday they were down 81% from their peak.
Markets also had renewed hopes for U.S. President Joe
Biden's proposed $1.9 trillion COVID-19 aid bill after the
Senate took steps to allow Democrats to pass Biden's package
without Republican support. ID:nL1N2K81MU
Nasdaq NQc1 and S&P 500 ESc1 futures were up 0.6 and
0.3% respectively. The CBOE volatility index .VIX , also known
as Wall Street's fear gauge, fell to a one-week low of 24.7.
Shares in Alphabet GOOGL.O rose more than 7% in premarket
trade after it topped quarterly sales expectations for its
advertising and cloud businesses. ID:nL4N2K84MK
Amazon.com AMZN.O shares were less buoyant as the
departure of Bezos raised questions about what's next for the
group, overshadowing quarterly sales surging above $100 billion
for the first time ever. ID:nL4N2K84N8
DRAGHI TO THE RESCUE?
Italian bonds and stocks outperformed on expectations former
European Central Bank chief Draghi could become the country's
next prime minister, ending weeks of political crisis.
Italy's 10-year bond yield fell more than 10 basis points at
one point to 0.548% IT10YT=RR , its lowest in two weeks, while
Italian stocks .FTMIB rose 2.5%, lifted by banks .FTIT8300 .
The gap between Italian and German 10-year yields narrowed
to 105.10 bps from 113 bps late on Tuesday DE10IT10=RR .
After meeting with the head of state, Draghi accepted the
task of trying to form a new government and said he was
confident of securing sufficient backing in the fractured
Italian parliament. ID:nR1N2HO02A
"A Draghi-led government with a clear mandate and a wider
majority is likely to be seen by investors and European partners
as the most credible option to face Italy's policy challenges,"
said UBS analysts and economists led by Giovanni Montalti.
"A technocratic government represents the upside case
scenario," they added.
Elsewhere, spot silver XAG= , which briefly surged on
Monday as small traders bought up the metal, rose 1% to $26.9 an
ounce as it rebounded from an 8% tumble on Tuesday. Analysts
said the retail trader-driven rally to a near eight-year peak in
the previous session had faded.
Spot gold XAU= was little changed at $1,837.5 per ounce.
Oil prices continued their upswing, supported by an
unexpected draw in U.S. crude stockpiles and a producer estimate
of a global oil market deficit this year.
Brent crude futures LCOc1 hit an 11-month high and were
last up 1% at $58.07 a barrel, while U.S. crude futures CLc1
climbed 0.9% to a new one-year high at $55.27.
In foreign exchange markets, the euro dropped to a 2-month
low against the dollar EUR=EBS , as investors looked to a
widening disparity between the strength of U.S. and European
pandemic recoveries. ID:nL1N2K90N3
A survey on Wednesday showed the euro zone's economic
downturn deepened in January as renewed restrictions hit the
bloc's dominant service industry hard. ID:nL8N2K92BY
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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