Global stock market party settles down for central bank reflection

By John Geddie

LONDON (Reuters) - Global stocks came off record highs and the euro fell back towards seven-week lows on Thursday as minutes from the European Central Bank's last meeting showed policymakeers had widespread concerns about the single currency's rapid rise.

The ECB's plans to map an exit from an era of ultra-easy monetary conditions could be complicated by the euro's strength, while uncertainty over who will succeed Janet Yellen at the helm of the U.S. Federal Reserve is also keeping investors occupied.

With a number of Fed policymakers due to speak on Thursday, including one of the leading candidates for the Fed Chair post, Jerome Powell, there should be more clues on how a recent batch of mixed economic data has affected their thinking.

"With the Fed having indicated at the last meeting that it still intends to raise interest rates again this year, it will be interesting to hear whether the data since then has changed this view or whether the same still applies," said Craig Erlam, senior market analyst at currency broker Oanda.

Monetary policy stole focus from political tensions in Spain, where one of its richest regions Catalonia is set to declare independence on Monday. Spanish bonds recovered ground after firm demand at a debt sale, while its stock market was bolstered by a recovery in Catalan bank shares. [GVD/EUR]

Euro zone stocks more broadly steadied from a wobble on Wednesday, but with public holidays across Asia and some key data due from the world's largest economy the United States coming up later this week, an index of global stocks edged down.

Wall Street was set to open a touch higher, however, eyeing another record high.

A Reuters poll showed global stocks will rise even more over the coming year as optimism about the global economy grows, but a slim majority of equity strategists polled by Reuters also said the current eight-year bull run will end in 2018. [nL4N1MF2Q6]

BAD BET?

The euro hit a day's low of $1.737 after the release of the ECB minutes from its September meeting, down 0.2 percent against the dollar and heading back towards a seven-week low of $1.169 hit earlier this week.

This will be uncomfortable for the many investors who have staked vast sums on its rise.

The amount of cash hedge funds are staking on a rising euro is the biggest in more than five years, the latest positioning data from the Commodity Futures Trading Commission showed.

There were some eye-catching moves elsewhere in currency markets as economic and political concerns at one stage knocked half a percent off the Australian dollar, the South African rand and the British pound.

The dollar was up 0.2 percent against a basket of major currencies on Thursday, having slipped a bit on Wednesday after a survey showed hiring slowed to an 11-month low of 135,000 [USADP=ECI], partly to disruptions from hurricanes, although this was better than economists' median forecast.

Economists expect Friday's non-farm payrolls report, one of the most closely watched pieces of economic data in financial markets, to show a similar slowdown.

They estimate a payroll increase in September of 90,000, substantially lower than the average over the past year of around 175,000, though some say investors may need to pay attention to state data due on Oct. 20 to exclude the impact from hurricanes.

U.S. 10-year bond yields were a tad lower at 2.32 percent, holding below multi-month peaks hit earlier this week.

"Because U.S. economic data for August to October is likely to be disrupted by hurricanes, markets may show a much smaller response to them," said Tomoaki Shishido, fixed income analyst at Nomura Securities.

"In that regard, the market will be focusing more on policy issues, such as tax cuts and the choice of the next Fed chair," he added.

Trump, who has promised to decide on the next Fed chair this month, also proposed a tax overhaul late last month. But it remains to be seen whether the tax plan can get through Congress given the divisions among Republicans.

Oil prices steadied on Thursday on expectations that Saudi Arabia and Russia would extend production cuts, although record U.S. exports and the return of supply from a Libyan oilfield dragged on the market. [O/R]

Brent crude was up 35 cents at $56.15 a barrel and U.S. light crude up 10 cents at $50.08.

Elsewhere, Qatar's stock index sank to a fresh five-year low on Thursday, hurt by the effects of sanctions imposed by neighbouring states.

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

(Reporting by John Geddie in London and Hideyuki Sano in Tokyo)