* MSCI world share index and euro hit highest since March
* EU seals recovery fund plan after five days of talks
* Virus vaccine trial results add to bullish mood
* Investors expect U.S. stimulus of more than $1 trillion
* Gold shines at 9-year high
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, July 21 (Reuters) - World shares climbed to their
highest since February and the euro briefly hit its strongest
since March on Tuesday, after European Union leaders sealed a
750 billion-euro ($857 billion) post-pandemic recovery plan
after marathon talks.
Hopes that vaccines against the COVID-19 disease might be
ready by the end of the year also supported the rally, following
promising early data from trials of three potential vaccines.
News of the EU deal, which includes 390 billion euros of
grants, down from an initially proposed 500 billion, along with
360 billion of low-interest loans, saw the euro EUR= climb as
high as $1.1470, Germany's DAX .GDAXI hit pre-COVID levels and
other main EU indexes rise 1.25% - 2.2%. .EU FRX/
EU summit chairman Charles Michel presented the final plan
as a "pivotal" moment to dispel doubts about the bloc's unity
and future. "This agreement sends a concrete signal that Europe is a
force for action," a jubilant Michel told a news conference.
French President Emmanuel Macron, who spearheaded the deal with
German Chancellor Angela Merkel, hailed it as "truly historic".
Italian, Spanish, Greek, Portuguese and Cypriot government
bonds rallied, reflecting that the countries will be allocated
some of the largest amounts from the new fund when scaled to the
size of their economies.
The Netherlands and Austria, which were part of a group of
"frugals" that had been calling for stricter terms for the
funding, saw their borrowing costs inch higher, along with
Germany. GVD/EUR
"It's a significant step towards a more integrated and
united Europe, which should boost the region's appeal to global
investors and facilitate its re-rating," said Barclays' head of
European equity strategy Emmanuel Cau.
"The rise of the euro isn't a major risk at the moment
because it illustrates the lower risk premium for the region,"
though it might weigh on exporters such as Germany at some point
down the line, he added.
Wall Street futures ESc1 were also up, by 0.5%, after its
latest tech-led charge had pushed the Nasdaq .IXIC up 2.5% to
a record closing high, and the S&P500 .SPX to a five-month
peak on Monday. .N
Asian and Australian shares followed with a 2% rise that
took MSCI's 49 country world index ..MIWD00000PUS to its
highest since February. Tokyo's Nikkei .N225 ended up a more
modest 0.7%, but the Sydney stock market .AXJO clocked up its
best day in over a month with a 2.6% jump. .T
SHOT IN THE ARM
The main all-world equity indexes now have rebounded 45% off
their March lows, boosted mainly by the record levels of
stimulus announced by governments and central banks to cushion
the impact of COVID-19 and its ensuing lockdowns.
Early data from trials of three potential COVID-19 vaccines
released on Monday, including a closely watched candidate from
Britain's Oxford University and one from CanSino Biologics
6185.HK and China's military research unit, also helped lift
markets.
The Oxford/AstraZeneca AZN.L vaccine is one of 150 in
development globally, but is considered the most advanced. In
its Phase I trial, the vaccine induced so-called neutralizing
antibodies - the kind that stop the virus from infecting cells -
in 91% of individuals a month after they were given one dose,
and in 100% of subjects who were given a second dose.
These levels were on a par with the antibodies produced by
people who survived COVID-19, a benchmark of potential success.
Commodity markets also gained. Brent crude oil LCOc1 was
up 31 cents at $43.59, while U.S. crude (WTI) gained 19 cents to
$41.00, though both were within July's tight $2-$3 trading
range. O/R
Gold rose to a nine-year high as expectations of higher
inflation from increased stimulus overshadowed the resultant
gain in risk appetite. Silver breached $20 for the first time
since September 2016. GOL/
Spot gold XAU= was up 0.6% at $1,825 per ounce by 0800
GMT, after hitting its highest since September 2011. U.S. gold
futures GCcv1 rose 0.4% to $1,823.80.
Gold tends to benefit from widespread stimulus as the metal
is widely viewed as a hedge against rising prices and currency
debasement. With the EU recovery plan sealed, investors will now
focus on possible further U.S. measures after the $3 trillion
injected earlier this year. "What's really driving the gold market is stimulus and we
are going to get more of it. It's the eye candy that's driving
sentiment right now," said Stephen Innes, chief market
strategist at financial services firm AxiCorp.
($1 = 0.8747 euros)
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Potential allocation of EU recovery fund as share of GDP https://tmsnrt.rs/2OzVnME
World stocks and oil vs COVID-19 https://tmsnrt.rs/2CAIUpH
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