World stocks hit 1-week high after China data lift

 

World shares edged up to their highest level in a week on Wednesday after Chinese trade data pointed to a steady recovery of the world's second largest economy.

 

China reported a mild trade deficit of $884 million in March as a 14.1 % year-on-year surge in imports eclipsed export growth of 10 %, signalling that domestic demand was gathering the pace needed to drive economic recovery.

 

Haibin Zhu, chief China economist at JP Morgan, said the boost to imports could help dispel a major concern over trends in domestic demand that had been prompted by weakness of import growth in previous months.

 

"The stronger than expected import growth for March suggests this cycle is probably coming to a turning point," Zhu said. "If domestic demand turns out to be stronger than expected, it's definitely positive for the economic outlook."

 

MSCI's all-world share index, which tracks stocks in 45 countries, rose 0.4 % to its highest level since April 3 by 0720 GMT as European shares followed gains in Asian markets.

 

The region's FTSEurofirst 300 opened up almost 0.5 % as an expected rebound in French industrial output bolstered the upbeat mood and helped offset a sharper than forecast drop in Spanish factory output.

 

London FTSE 100, Paris's CAC-40 and Frankfurt's DAX were between 0.4 and 0.6 % higher, while in the currency market the euro also rose to $1.31.

 

The yen, which slumped following last week's announcement of the Bank of Japan's ambitious monetary expansion campaign, bobbed around near a four-year low of 99 to the dollar for a second day as traders again consolidated positions.

 

Most market players expect yen selling to resume but said it may have to wait until currency options close to the 100 mark expire. This should end the current demand from banks to buy the yen and sell dollars to protect their exposure.

 

In the bond market, German Bund futures opened lower, easing away from recent highs as a wave of newly-issued bonds absorbed much of investors' demand, with prices seen slipping further in the short term.

 

U.S. stock futures were pointing to another higher open on Wall Street after the Dow Jones industrial average ended Tuesday at a lifetime high.

 

Investor focus will be on the publication of minutes from the U.S. Federal Reserve's recent meeting.

 

They are expected to show another spirited debate about when and how to end the central bank's stimulus programme, although economists believe the recent slightly weaker U.S. data may have softened the tone of the bank's more hawkish members.

 

(Additional reporting by China Economics Team in Beijing and Melanie Burton in Singapore; Editing by David Stamp)