* MSCI world stocks index 7% away from record highs
* European stocks slightly lower on poor China, German data
* Asian stock markets rise for eight straight sessions
* Oil prices rise after output cuts extended
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(Recasts, updates prices, adds graphic)
By Thyagaraju Adinarayan
LONDON, June 8 (Reuters) - World stocks inched higher on
Monday, adding to a 42% surge from their March lows, as a
surprise jump in last week's U.S. employment data fuelled hopes
of a quicker global economic recovery from the coronavirus
pandemic.
The MSCI all-country world stocks index .MIWD00000PUS ,
which covers 49 markets around the world, was 0.1% higher and
just 7% away from a fresh record high. The benchmark S&P 500
.SPX is within striking distance of turning positive for the
year.
In Europe, a surge in travel and leisure stocks helped cap
losses on the pan-regional index .STOXX , which traded 0.2%
lower after poor German and Chinese economic data.
Asia shares rose in a catch-up rally following Friday's U.S.
jobs data but were again capped by the Chinese data, published
on Sunday, which showed exports contracted in May. German industrial output meanwhile slumped a record 17.9% in
April and firms now expect a bumpy road ahead despite a massive
stimulus package. "European stocks are probably under pressure following weak
China data overnight. However, we do not think this marks the
end of the rally," said Marija Vertimane, senior strategist at
State Street Global Markets.
U.S. S&P 500 futures ESc1 were 0.5% higher, building on
last week's rally. Wall Street's fear gauge .VIX remained
solidly pinned below 30 points on encouraging economic data and
central bank stimulus.
"We are beginning to see evidence of economic data improving
gradually and thankfully no major secondary spikes in
infections. We expect that to encourage investors to come back
to the market," Vertimane added.
Hopes of a quick recovery in the U.S. could however be
quashed by mounting wave of protests demanding police reform
after the killing of a black man in Minneapolis. CURVE CONTROL
The U.S. jobs data pushed the 10-year Treasury yield
US10YT=RR as high as 0.959% on Friday, a level not seen since
mid-March. It last stood at 0.929%.
The rise in U.S. yields puts more focus on the U.S. Federal
Reserve, which will hold a two-day policy meeting ending on
Wednesday.
"Steepening of the U.S. Treasury curve reflects to a
significant extent high (bond) supply versus QE (quantitative
easing)," Nikolaos Panigirtzoglou, strategist at JPMorgan, said.
"The Fed at $4-5 billion QE a day is not doing enough to
offset supply. It would become more challenging for the Fed if
the 10-year...yield approaches 1%."
Pointing to the spread between U.S. two- and 10-year
Treasury yields -- an indicator of economic expectations –-
widening above 70 basis points to its highest since February
2018, Panigirtzoglou believes there is scope for Fed to
introduce yield curve control measures.
In Europe, yields on top-rated German government bonds
dipped but remained near the more than two-month highs hit last
week after the European Central Bank expanded its emergency
stimulus scheme. Brent crude LCOc1 climbed 1.5% to $42.93 per barrel. U.S.
West Texas Intermediate crude CLc1 rose 1.3% to $40.08 a
barrel. O/R
The broad improvement in sentiment weighed on the safe-haven
Japanese yen, which stood at 109.5 to the dollar JPY= , near
Friday's 10-week low of 109.85.
The euro changed hands at $1.1303 EUR= , after touching a
three-month high of $1.1384 on Friday.
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World stock valuations https://tmsnrt.rs/2XIH51C
Fed Balance Sheet versus VIX https://tmsnrt.rs/37aQ9iZ
US yield curve steepens https://tmsnrt.rs/2ASzEfi
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