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Dollar hits two-week high on U.S. tax reform optimism, world shares climb

Reuters  |  LONDON 

By Ritvik Carvalho

(Reuters) - The dollar rose to its highest level in two weeks on Thursday over optimism the United States would successfully push through reforms, while world rebounded after two straight days of losses.

The U.S. currency slipped against the safe-haven Japanese yen on Wednesday after U.S. President Donald Trump said he would recognize Jerusalem as the capital of Israel - a move that imperiled Middle East peace efforts and provoked widespread condemnation.

But amidst a broader climb in stocks on Thursday, the greenback rose 0.3 percent against the yen to trade at 112.60 yen, and hit a two-week high against a basket of peers.

The MSCI World Index, which tracks in 47 countries, was up 0.1 percent.

Underpinning some of the dollar's gains analysts said was some cautious optimism on progress over U.S. reforms.

U.S. Senate Republicans agreed to talks with the House of Representatives on sweeping legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed Dec. 22 deadline.

"The dollar is fighting back a little bit but there's still some caution, as it could still be a few weeks until we know the oucome of the reform bill," said Rabobank currency strategist Jane Foley, in

"The yen will be sensitive if geopolitical tensions rise again, and I think there's an inevitability to that, so I don't think there's going to be too much updside for dollar/yen in this environment," she added.

Upbeat U.S. private-sector employment data released on Wednesday also provided some support to the dollar. But strategists said the currency would trade in narrow ranges until the release of the closely watched non-farm payrolls report on Friday.

Bitcoin soared to a record high of more than $14,500, up almost 7 percent on the day and continuing a staggering surge from less than $1,000 at the beginning of the year.

STOCKS RECOVER

European stock appeared to take their cues from a general recovery in tech stocks overnight in Asia and Wall Street.

The pan-European STOXX 600 was up 0.2 percent with tech stocks initially up 0.5 percent. Financials, industrials and healthcare also added points to the index.

"We have seen some aggressive moves in Asia, whereas Europe seems to be a bit more subdued," said David Madden, analyst at CMC in

"It's almost like European look for an excuse to selloff but it takes them a lot to be convinced to actually push higher."

For Live blog on European and UK stock see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

in the energy sector, which weighed on earlier in Wall Street and Asia, rose in Europe, as oil prices recovered from a big fall on Wednesday.

U.S. West Texas Intermediate crude futures traded at $56.13 per barrel in European trade, up 0.3 percent on the day.

Brent futures gained 0.4 percent to $61.45 per barrel.

MSCI's broadest index of Asia-Pacific outside Japan edged up 0.2 percent as some technology bellwethers rebounded, with Tencent rising over 3 percent and Alibaba more than 2 percent.

In Japan, the Nikkei jumped 1.5 percent, recouping much of its 2.0 percent loss the previous day, which was its biggest fall since late March.

The price of copper, seen as a barometer of economic health because of its extensive industrial use, also fell sharply earlier this week, raising worries about the world growth outlook.

Copper traded at $6,576 a tonne, up 0.5 percent on the day and above a two-month low of $6,507.5 touched on Tuesday.

(Reporting by Ritvik Carvalho; additional reporting by Jemima Kelly in London)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, December 07 2017. 15:04 IST
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