* China Q2 GDP matches consensus, monthly activity data
upbeat
* Europe dithers, MSCI world creeps towards highest since
Feb 2018
* MSCI ex-Japan reverse losses; Chinese, HK shares bounce
off lows
* Aussie dollar climbs, Morgan Stanley says re-enters short
USD/JPY trade
* Oil see-saws, industrial metals nudge higher
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, July 15 (Reuters) - Surprisingly upbeat economic
soundings from China pushed world shares towards an 18-month
high and steered the Aussie dollar upwards on Monday, as
Citigroup C.N delivered Wall Street's first heavyweight beat
of the new earnings season.
Investors were picking through Citigroup's 7% profit jump
.N and waiting on what could be a prickly G7 finance chiefs
meeting in France later in the week, but there was already
plenty to get on with.
China's second-quarter annual GDP growth rate fell to a
27-year low of 6.2% as expected, but its quarterly growth
reading of 1.6% was ahead of forecasts along with June reports
on industrial production, retail sales and urban investment.
Shanghai and Hong Kong stock markets had ended marginally
positive, only held back by the concern that such a brisk pickup
in activity may see economic policymakers ease back on the
monetary and fiscal stimulus measures that were deemed largely
responsible for the acceleration.
A report by Reuters that Washington may approve licenses for
companies to restart new sales to Huawei in as little as two
weeks also improved the mood in China's tech sector, while
Europe eventually found traction to edge MSCI's world index
.MIWD00000PUS close to February 2018 highs. .EU
"It is no surprise that China is slowing down and if you
look at the other components of the data like retail sales and
industrial production, they are looking a little bit better than
expected," said CMC Markets analyst David Madden.
"Traders seem to be content to maintain a bit of optimism."
With the S&P 500 starting above 3,000 points for the first
time and pointing higher still, markets are confident the U.S.
Federal Reserve will cut its key interest rate by at least a
quarter point late this month.
Corporate results are also now key. According to Refinitiv
IBES data, S&P 500 companies are expected, on average, to see
their year-on-year profits dip 0.4% this earnings season, which
would be the first quarterly decline in three years.
Citigroup's forecast-topping numbers came as it kept a tight
lid on costs and strength in consumer lending helped the
third-largest U.S. bank counter weakness in its trading
business.
Fellow bulge-bracket banks JP Morgan JPM.N , Goldman Sachs
GS.N and Wells Fargo WFC.N will report on Tuesday while Bank
of America Corp BAC.N as well as Netflix NFLX.O , Microsoft
MSFT.O and Honeywell HON.N are all due later in the week.
GERMAN ANGST
In currency markets, the Australian dollar AUD=D3 , often
played as a liquid proxy for the Chinese yuan, sprang to its
highest since July 4 against the dollar USD= as the greenback
ticked higher against the yen JPY= and Swiss franc CHF= .
/FRX
At 12.39%, the Vix volatility gauge .VIX had its lowest
close since April. Ten-year U.S. Treasury yields continued to
nudge higher, with the yield curve between three months and 10
years -- whose inversion for much of the past two months was
widely seen as a harbinger of recession over the next couple of
years -- back probing positive territory for the first time
since mid-May.
Most euro zone government bond yields edged down from recent
3 1/2-week highs, although the mixed signals from the global
economy meant it was all small in scale.
Germany's benchmark 10-year bond yield was down just a basis
point at minus 0.25% DE10YT=RR , edging off Friday's 3 1/2-week
high but still about 16 basis points above record lows reached
earlier this month. GVD/EUR
Germany's Economy Ministry said it expected the economy --
Europe's largest -- to turn in a weak second quarter and that
there remain significant risks from the ongoing trade conflicts
and Britain's expected departure from the European Union.
The euro barely budged though from $1.1281 as it stuck well
within its recent trading range of $1.14 to $1.11.
"The whole movement in bonds lost steam last week," said
Norbert Wuthe, a rates strategist at Bayerische Landesbank.
Commodities markets struggled to make up their minds about
how to interpret the Chinese data.
Brent crude LCOc1 see-sawed down first and then up to
$67.02. U.S. crude CLc1 wobbled around $60 a barrel, although
that also came after both contracts had posted their biggest
weekly gains in three weeks last week on diplomatic tensions in
the Middle East and cuts in U.S. oil production. O/R
Gold XAU= slipped to 1,412 an ounce, drifting away from a
recent six-year top of $1,438.60, but China-sensitive industrial
metal copper climbed and nickel prices were boosted by
additional supply worries from major producer Indonesia.
"This (China data) is a big relief. It seems that the
government's support has eventually had some positive impact on
the economy, especially in the seasonally weak month of June,"
said analyst Helen Lau of Argonaut Securities.
Later in the week, U.S. retail sales and industrial
production data will provide clues about the health of the
world's largest economy. The U.S. Federal Reserve will release
its 'Beige Book' on Wednesday, which investors will scour for
comments on how trade tensions were affecting the business
outlook.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Additional reporting Dhara Ranasinghe in London and Mai Nguyen
in Singapore; Editing by Andrew Heavens and Catherine Evans)