* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* European shares open higher
* MSCI ACWI index up 0.5%, best day in over two weeks
* Crude bounces after Trump says U.S. Navy destroys Iranian
drone
* Dollar gains 0.1%, rate cut bets cap gains
By Ritvik Carvalho
LONDON, July 19 (Reuters) - Global stocks rose on Friday as
investors firmed up bets on a U.S. interest rate cut at the end
of July after a speech by a top Federal Reserve official further
cemented expectations for one, fuelling appetite for risky
assets and capping the dollar.
European shares opened higher across the board, with the
pan-European STOXX 600 .STOXX index gaining 0.7% in early
trade. Britain's FTSE 100 index .FTSE gained 0.6% and
Germany's DAX rose 0.75%. .EU
In oil markets, crude surged after the United States said
its navy had destroyed an Iranian drone in the Strait of Hormuz,
a major chokepoint for global crude flows, raising concerns
about supply disruptions out of the region.
Iran said all its drones had returned safely to base, and
there was no sign of a major escalation in the Gulf.
Comments by New York Fed President John Williams on Thursday
made it virtually certain, in the markets' view, that the Fed
would cut interest rates by at least 25 basis points at its July
30-31 policy meeting and also revived expectations of an even
deeper 50 bps reduction. Financial markets reacted quickly, with Fed fund rate
futures 0#FF: at one point pricing in an almost 70% chance of
a 50 basis point cut. The odds eased to around 40% after the New
York Fed said William's speech had not been about immediate
policy direction. MSCI's All-Country World Index .MIWD00000PUS , which tracks
shares in 47 countries, was having its best day in over two
weeks, up nearly half a percent on the day. It was, however,
still on track to break a six-week streak of weekly gains.
E-mini futures for the S&P 500 index ESc1 were 0.3%
higher, indicating a higher opening on Wall Street later in the
day.
"Despite a rather lackluster earnings season so far,
investors are focusing on the prospect of a considerably easier
monetary policy, which is why we see stocks ready to open higher
this morning," said Konstantinos Anthis, head of research at
ADSS.
WILL RATE CUT SUFFICE?
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 1%, bouncing back from the previous day's
losses, while Japan's Nikkei .N225 advanced 2%.
Elsewhere in Asia, the Shanghai Composite Index .SSEC rose
0.8%, Australian stocks .AXJO added 0.75% and South Korea's
KOSPI .KS11 gained 1.4%.
For the week, the MSCI ex-Japan index climbed a modest 1%,
as riskier assets were partly capped by U.S. President Donald
Trump's reiteration of his threat to impose further duties on
Chinese imports.
The two sides resumed talks recently to seek an end to a
year-long trade war that has rattled financial markets and
slowed global growth. But most analysts do not expect an
agreement any time soon, with some predicting a strong risk of
further tariff escalation.
"Although central banks around the world have embarked on
policy-easing in a bid to support their respective economies,
investors are left to ponder whether the stimulus will be enough
to offset the effects from heightened U.S.-China trade
tensions," said Han Tan, market analyst at FXTM.
The dollar index .DXY against a basket of six major
currencies stood about 0.1% higher at 96.875 after losing
roughly 0.5% overnight to a two-week low of 96.671 in the wake
of the comments from the Fed's Williams.
The euro EUR= was 0.15% lower at $1.1259 after climbing
0.45% the previous day.
U.S. Treasury yields were lower across the board. The 2-year
yield US2YT=RR was at 1.7894% after touching a two-week low of
1.7520%. The 10-year yield US10YT=RR declined to a 10-day low
of 2.023% and was last at 2.0465%.
In commodities, U.S. crude oil futures CLc1 reversed a
large part of the previous day's deep losses, briefly rising
1.45% to $56.10 per barrel before easing back to $55.81, up
0.9%.
Crude rallied after the reports on the Iranian drone. Oil
prices had fallen on Thursday amid expectations that output
would rise in the Gulf of Mexico as operations resumed following
last week's hurricane. O/R Spot gold XAU= eased 0.5% as investors locked in profits
after bullion surpassed $1,450 an ounce for the first time in
more than six years on dovish Fed signals and Middle East
tension. GOL/