Upbeat economic data powered Asian and emerging share markets to a fourth straight day of gains on Tuesday, while gold and the yen lost some of their safe-haven appeal as Washington delayed a possible strike on Syria, Reuters reported.
European shares opened higher, helped by a second huge mobile telecoms deal in as many days as Microsoft announced a $7.2bn bid for the phone business of once-dominant Finnish manufacturer Nokia.
The dollar was also in a bullish mood, hitting its highest in over a month against both the yen and the euro as the prospect of a cut in United States monetary stimulus complemented the flows caused by reduced tensions in the Middle East.
“The Syria situation is clearly a short-term disturbance but we don’t expect it to disrupt the US recovery or even the European recovery,”Chief Investment Officer for ABN Amro, Didier Duret, said.
“The volatility we are seeing now is a good period to accumulate (equities) with the medium-term in mind.”
After some choppy initial moves, Europe’s FTSEurofirst 300 (was up 0.2 per cent by 0745 GMT, led by Britain’s FTSE 100 and Germany’s DAX. France’s CAC 40 and Milan’s FTSE both lost 0.2 per cent.
Earlier MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.76 per cent, building on Monday’s 1.2 per cent rise and marking a fourth day of gains.
The Nikkei stock average was the region’s standout performer.
It surged three per cent to a three-week high helped by the weaker yen, hopes of continued government stimulus and talk Japan could win the right to host the 2020 Olympic Games.
After Monday’s upbeat round of global data, China’s non-manufacturing purchasing managers’ index dropped slightly to 53.9 last month from July’s 54.1. But it remained solidly in expansion territory and suggested recent government measures are supporting the economy.
As investors rediscovered an appetite for risk, gold eased about 0.2 per cent to $1,391.49 an ounce while the dollar hit a one-month high against a basket of currencies as well as the yen.
The greenback bought 99.70 yen, and the dollar index rose to 82.379, also underpinned by U.S. monetary policy expectations.
“I expect the dollar to be supported amid expectations that the Federal Reserve will start tapering its quantitative easing,” said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.
Traders expect the Fed to start reducing its stimulus at its policy meeting on September 17-18 unless US payroll numbers due on Friday fall considerably short of forecasts.
While tapering expectations support the dollar, a near-term withdrawal of stimulus would weigh on equities, particularly those in emerging markets that have come under pressure in recent months on expectations of capital outflows.
“It’s not a question of whether the US Federal Reserve will cut quantitative easing, it’s a matter of how much and the pace of their reduction,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
Australia’s dollar bounced more than half a cent as its central bank kept interest rates at a record low 2.5 per cent as expected on Tuesday, saying the level was appropriate though it could ease again if needed.
While Wall Street was closed for the Labor Day holiday on Monday, US stock futures pointed to solid gains when trading resumes later with the S&P 500 contract up 0.9 per cent.