Monday August 3, 12:39 PM
GLOBAL MARKETS-Banks, China kick equities to 2009 high
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 3 (Reuters) - World stocks shot up to yet another new 2009 high on Monday with banking news from Europe and signs of a pick up in Chinese economic activity driving investors to buy.
Wall Street looked set to join. The dollar tumbled to a 2009 low against a basket of major currencies.
European shares were up sharply after UBS (Virt-X: UBSN.VX - news) appeared to have settled a tax dispute without the need to pay a fine, bad debts at Barclays (LSE: BARC.L - news) failed to unsettle investors and HSBC (LSE: HSBA.L - news) beat earnings expectations.
The FTSEurofirst 300 index of top European shares was up 1.5 percent and has now gained more than 44 percent from its lifetime low on March 9.
Europe's main banking index was up 3.4 percent and is now up 144 percent since March's floor.
Barclays reported an 8 percent rise in half-year profit but bad debts almost doubled.
UBS shares rose on reports it may not have be fined as part a settlement with the U.S. government on wealthy Americans suspected of using the Swiss bank to evade taxes.
HSBC said its first half profits halved from a year ago but the results were better than analysts had calculated.
Asian stocks clambered up to an 11-month high, helped by Chinese shares.
Two surveys showed Chinese factory growth accelerating in July thanks to a revived domestic economy and slight pick-up in demand for its exports. The China purchasing managers index from brokerage CLSA hit a one-year high.
The MSCI index of Asia-Pacific (002790.KS - news) stocks outside Japan were up 1.3 percent, passing the levels of early September last year and taking gains on the year to around 47 percent.
This all drove the MSCI all-country world share index up more than 1 percent, eclipsing its previous high for the year which was reached on Friday. This has in part been fuelled by upbeat company results, particularly on Wall Street.
'All in all, given the better than expected corporate results, the markets continue to support the idea of an imminent recovery,' wealth manager BSI said in a note, adding that risk appetite was growing as more investors fear missing the rally.
DOLLAR IN DUMPS
The dollar hit its lowest point this year against a basket of currencies after higher oil prices, firm global stock markets and economic data boosted investments in riskier assets. The currency is usually hit by risk-positive news.
The euro rose to a two-month peak against the dollar and was at $1.4288.
'It's hard to find any negative news out there at the moment, it's all about the risk appetite trade coming back in,' CMC Markets analyst James Hughes said.
'Almost as big as the banking results today have been oil prices, which have risen above the key $70 level and helped commodity currencies,' he added.
Euro zone government bond yields, which move inversely to prices, jumped higher as investors switched to higher-risk investments.
The 10-year Bund yield was at 3.326 percent, 4.6 basis points more than in late Friday trade while the 2-year Schatz yielded 1.289 percent.
(Additional reporting by Jessica Mortimer; Editing by Ruth Pitchford)
(To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Hub click on http://blogs.reuters.com/hedgehub) Keywords: MARKETS GLOBAL
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