GLOBAL MARKETS-World shares close in on record peak as vaccines fuel normalisation hopes

* MSCI ACWI near record peak hit in late January
* Brisk earnings, U.S. stimulus, strong data boost sentiment
* Bond yields higher on rising inflation expectations
* Dollar, pound, shekel favoured on progress in vaccination

By Hideyuki Sano
TOKYO, Feb 5 (Reuters) - - Global shares closed in on their
record peak on Friday, with Asian shares taking their lead from
Wall Street, as progress in vaccine distribution prompted bets
on further normalisation in the global economy and earnings
recovery.
MSCI's gauge of Asian shares outside Japan .MIAPJ0000PUS
rose 0.4% while Japan's Nikkei .N225 rallied 1%.
An index of the world's major 50 markets, MSCI ACWI
.MIWD00000PUS , extended its gains into a fifth straight day to
come within reach of a record high touched about two weeks ago.
On Wall Street, each of major indexes rose more than 1% on
Thursday, with the Nasdaq Composite Index .IXIC and S&P 500
.SPX setting record highs.
"What's driving the market is corporate earnings are posting
a strong recovery," said Jumpei Tanaka, strategist at Pictet.
"And there are piles of money saved in MMF (money market
funds) and elsewhere that are likely to be invested in stocks
once the economy normalises as vaccination programmes progress."
Expectations of a large stimulus by the Biden administration
also supported risk sentiment while better-than-expected data on
U.S. job markets published in the past two days is fanning a
bullish mood on the upcoming payroll report due later in the
day.
Longer-term U.S. Treasury yields rose in anticipation of a
large pandemic relief bill from Washington as well as on
heightening inflation expectations.
The benchmark 10-year yield US10YT=RR stood at 1.136%,
having risen to a three-week high of 1.162% the previous day
while the 30-year bonds US30YT=RR yielded 1.929%, near its 10
1/2-month high of 1.951% touched on Thursday.
Bond yields rose in Europe as well, with Germany's 30-year
government bond yield DE30YT=RR climbing back in positive
territory for the first time since September.
A market gauge of future U.S. inflation USIL5YF5Y=R was at
its highest since October 2018 while that for the euro zone
EUIL5YF5Y=R hit its highest since May 2019.
In the currency market, the dollar strengthened against most
of its peers as traders' focus appeared to shift to the relative
strength of the U.S. growth.
Until recent weeks, the dollar had been sold on expectations
that global economic recovery will promote outflows of funds to
riskier currencies from the safe-haven dollar.
The U.S. dollar index =USD stood near a two-month high,
having risen 1.1% so far this week, on course for its biggest
weekly increase since October.
The euro changed hands at $1.1964 EUR= , having hit a
two-month low of $1.1955 overnight while the yen hit a
3-1/2-month low of 105.70 per dollar JPY= .
"It seems markets are now trying to trade on economic
normalisation based on progress in vaccination," said Arihiro
Nagata, general manager of global investment at Sumitomo Mitsui
Bank.
"The fact that the only currencies that are doing better
than the dollar over the past two days are the British pound and
the Israeli shekel, the two countries that are going further
ahead in vaccination, seems to support that."
The British pound stood at $1.3678 GBP=D4 not far from its
2 1/2-year peak of $1.3759 hit late last month.
The shekel ILS=D4 rose over the past two days, reversing
its decline since mid-January after the Bank of Israel
intervened to stem the shekel's strength after it had hit a
24-year high.
Strength in the dollar pushed gold to a two-month low of
$1,785.10 per ounce XAU= on Thursday. The metal was last
traded at $1,797.40.
Oil extended its gains on upbeat economic mood, falling
inventories and the OPEC+ decision to stick to its output cuts.
U.S. crude CLc1 rose 1% to $56.80 per barrel and Brent
LCOc1 was at $59.38, up 0.9%.

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Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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