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GLOBAL MARKETS-World shares up as China data fuels bets on growth

Published 17/01/2020, 10:17
© Reuters.  GLOBAL MARKETS-World shares up as China data fuels bets on growth
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* MSCI world index hits record

* China 2019, Q4 GDP growth in line with expectations

* Investors eye global growth after data and easing trade

tensions

* European shares up 0.7%

* Casino loses 12% after profit forecast cut

* Wall Street futures up

(Adds European prices, updates throughout, adds quote changes

byline and dateline)

By Tom Wilson and Andrew Galbraith

LONDON/SHANGHAI, Jan 17 (Reuters) - World shares rose to

record highs on Friday, buoyed by Chinese data that suggested

the world's second-biggest economy was stabilising.

Riskier assets were in demand worldwide as the Chinese

growth data, along with easing trade tensions with the United

States, sent the MSCI world equity index .MIWD00000PUS up 0.2%

and further into record territory.

China's economy grew 6% between October and December last

year. Anaemic domestic demand and the trade war with the United

States led to growth of 6.1% in 2019, the slowest in 29

years. But the data reinforced recent signs of an improvement in

Chinese business confidence as trade tensions eased after

Beijing and Washington signed an initial deal on Wednesday to

defuse their tariff war.

Investors were turning their attention to what many see as

improved prospects for growth across the world. European shares

.STOXX gained 0.7% in early trade, with Frankfurt GDAXI. ,

Paris .FCHI and London .FTSE indexes up 0.5% to 0.7%. Wall

Street futures EScv1 were also pointing up.

The Chinese data fuelled a rise in the Chinese yuan, which

touch a six-month high of 6.8660 to the dollar CNY=CFXS .

"Investors that were last year buying risky assets rather

defensively - not really removing their hedging - right now are

deploying cash," said Olivier Marciot, a portfolio manager at

Unigestion.

"A number of investors that were sitting on big piles of

cash are starting reallocating. People are unloading cash

positions into financial assets."

In France, however, protests against planned pension reforms

started to hit major retailers. Supermarket Casino CASP.PA

slumped 12% after slashing its forecast for 2019 operating

profit growth because of the damage from transport strikes in

the fourth quarter.

Asian markets also rose after the Chinese data, with MSCI's

broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS gaining 0.4%.

China's own blue-chip index .CSI300 ended 0.1% higher,

down from an earlier rise of as much as 0.7%. The index has

rallied more than 8.5% since the beginning of December, fuelled

by hopes for improved trade relations with the United States.

Shares in Australia .AXJO and South Korea .KS11 both

rose, with Japan's Nikkei .N225 climbing to a 15-month high.

"This is all good news and positive for the China story,"

said Daniel Gerard, senior multi-asset strategist at State

Street Global Markets in Hong Kong.

MAINTAIN MOMENTUM?

Still, analysts say global equities may find it difficult to

maintain momentum from their recent rally as optimism over the

trade truce gives way to uncertainty over the next steps in

trade talks.

While the Phase 1 deal signed on Wednesday may defuse the

18-month trade row, analysts said it was unlikely to ease

broader friction between the two countries.

Most of the tariffs imposed during the dispute remain in

place and a number of issues that sparked the conflict are still

unresolved. "The challenge from here is how long we can maintain these

improvements," said Steven Daghlian, market analyst at CommSec

in Sydney.

The dollar held steady, reaching eight-month highs against

the yen JPY= before trimming its advance to 0.09% to 110.24.

The index .DXY that tracks the dollar against a basket of six

major rivals was flat at 97.302.

Encouraging data from the United States on Thursday had

boosted the dollar. Upbeat earnings from Morgan Stanley, rising

U.S. retail sales, a strong labour market and robust

manufacturing data had helped to lift Wall Street to record

highs. .N

Google's parent, Alphabet GOOGL.O , became the fourth U.S.

company to top a market value of more than $1 trillion. Its

shares were up nearly 17% over the last three months.

For Reuters Live Markets blog on European and UK stock

markets, please click on: LIVE/

ASX200 historical performance https://tmsnrt.rs/370OfAB

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