Stocks get that Friday feeling as stimulus trumps growth concern

LONDON (Reuters) - World shares neared record highs and bond yields fell on Friday, as investors shrugged off slowing global growth and focused instead on the continued stimulus provided by the world's major central banks.

European shares edged down from three-week highs, pegged back partly by a rebound in the euro, but were still on track for their best week in six, and Germany's DAX for its best week since January.

U.S. futures pointed to a slightly positive open on Wall Street , after the S&P 500 <.SPX> hit an all-time high on Thursday.

A batch of soft manufacturing data on Thursday from the United States, China and Germany pointed to sluggish global growth but cemented investor hopes that central banks will keep stoking activity.

Federal Reserve Chair Janet Yellen will take centre stage later on Friday. Earlier this week Fed meeting minutes appeared to push the timing of the first U.S. rate hike out to late 2015, while the ECB's Benoit Coeure said the euro zone bank could increase its bond purchases in the near term.

"There are chances of more rate cuts in China, the Fed is delaying its rate hikes and Europe is treading a steady course so the risks are on the limited side for the market," said ABN Amro Chief Investment Officer Didier Duret.

"We are seeing the tail of the slowdown in the United States in the first quarter, meaning it is probably the last set of data that are rather negative."

By 1155 GMT the FTSEuroFirst 300 index <.FTEU3> was down 0.2 percent, with luxury goods group Richemont falling on weak sales. Britain's FTSE 100 <.FTSE> was up 0.6 percent at its highest level in 10 days in the wake of a better-than-expected improvement in UK public finances.

Earlier, Wall Street's record high helped China's main index to leap nearly 3 percent to a fresh 7-year high, rounding off a weekly gain of 8 percent, its strongest week this year. It has risen 45 percent in only six weeks.

MSCI world equity index <.MIWD00000PUS>, which tracks shares in 45 countries, was up 0.2 percent at 443.54, close to a record high of 443.98 hit in April.

BONDS STEADYING

U.S. inflation data for April is due at 1230 GMT. Muted price pressures are expected to give the Fed more breathing space regarding of the timing of what will be its first rate hike since June 2006.

The U.S. economy's recovery has not been as robust as expected. U.S. data released overnight appeared to vindicate the Fed officials' cautious policy stance.

With weaker-than-expected existing home sales, manufacturing sector and U.S. Mid-Atlantic business activity, U.S. Treasury yields fell, helping nudge the dollar away from recent highs.

The euro rose 0.6 percent to $1.1175 , shrugging off data showing German business morale deteriorated slightly in May for the first time in seven months. It had hit a three-week low of $1.1062 earlier this week amid Greek debt concerns and was poised to lose almost 2.5 percent on the week, snapping a five-week winning streak.

The dollar also eased slightly to 120.975 yen after scaling a two-month peak of 121.49 midweek.

The benchmark 10-year German bond yield fell four basis points to 0.60 percent and the 10-year U.S. yield to 2.17 percent .

Analysts at Barclays noted "tentative" signs that the euro zone bond market was stabilising after a rout that drove Bund yields to 0.80 percent from 0.05 percent. That high is unlikely to be retested any time soon.

"Were financial conditions to tighten further, the ECB

could respond more forcefully," they said in a note on Friday.

Oil prices slipped on Friday as worries over the impact of war in the Middle East on crude supplies were outweighed by reports of profit-taking ahead of a long weekend. [O/R]

Brent was down 45 cents at $66.09 a barrel after closing up 2.3 percent on Thursday.

(Additional reporting by Marc Jonees in London and Saikat Chatterjee in Hong Kong; Editing by Toby Chopra/Ruth Pitchford)

WhatsAppFacebookTwitterLinkedinBeloudBluesky