* Euro hits 18-month high of $1.1543, Aussie hits 1yr peak
* Silver soars to an almost seven-year top
* Virus surge stalls Aussie stocks
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Tom Westbrook and Elizabeth Dilts Marshall
SINGAPORE/NEW YORK, July 22 (Reuters) - The euro stood at an
18-month high, silver soared and commodities forged ahead on
Wednesday, as economic recovery hopes drove bets on rebounding
world demand and a falling U.S. dollar.
Stock markets in Asia ground higher, except in Australia
where a surge in coronavirus infections put pressure on bank and
travel shares and the benchmark index .AXJO fell 1%. S&P 500
stock futures ESc1 advanced 0.4% in line with the relatively
positive mood.
The euro's EUR=EBS rally was triggered by European Union
leaders striking a deal for a region-wide rescue plan, a huge
step toward both recovery and a stronger union. The common currency surged to $1.1543, its best since
January 2019, as investors bet an economic rebound would benefit
currencies besides the dollar as global exports pick up and
trade improves.
"Overall, sentiments are improving," said Vishnu Varathan,
head of economics at Mizuho Bank in Singapore.
"It's given the euro that afterburner, and it's true for the
Aussie as well ... it went for broke once the dollar started
unravelling."
The Australian dollar AUD=D3 hit a more than one-year high
of $0.7144 on Wednesday and was further bolstered by strong
domestic retail sales data. Bellwether three-month copper futures HGc3 CMCU3 sat
close to two-year peaks and iron ore prices opened higher still,
shrugging off a production increase in Brazil and a cautious
outlook from global miner BHP. MET/L IRONORE/
Sliding real bond yields have added to the lustre of
precious metals, at the same time that industrial demand has put
silver on a tear. Spot prices XAG= for the metal, used in
solar systems, rose 5% on Wednesday and are up 15% for the week.
Gold XAU= also made a fresh nine-year high of $1,865.35.
"The silver-gold price ratio is still well short of the
long-term average," said Commonwealth Bank of Australia
commodities analyst Vivek Dhar
"We think that means that a sustained rally in silver can
continue, particularly when demand hopes and supply concerns are
added to the mix."
CLIFF CONCERNS
Elsewhere there was a lid on optimism. The spread of the
coronavirus in the United States and other hotspots such as
India, Latin America, Tokyo and Melbourne, gathered pace and
signs abound that economic recovery is far from assured in the
shorter term.
Japanese factory activity contracted for a 15th straight
month in July. Economists are expecting trade-sensitive South Korea to post
its worst economic contraction in 20 years when second-quarter
GDP data is published on Thursday. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.2% to sit just below a five-month top
made on Tuesday. Japan's Nikkei .N225 dipped 0.2%.
The United States also reported more than 1,000 deaths from
COVID-19 on Tuesday, the first time the grim milestone has been
passed since June, and President Donald Trump warned that things
will probably get worse before they get better. Republicans and Democrats are at loggerheads over the size
of the next fiscal relief package as a month-end "fiscal cliff"
deadline for extending unemployment insurance looms.
"It remains to be seen if Republicans and Democrats have the
same resolve demonstrated by EU leaders to find middle ground by
next week," DBS analysts in Singapore said in a note.
"This concern was evident in U.S. equities."
On Wall Street overnight the benchmark S&P 500 .SPX index
poked in to positive territory for the year so far, but
struggled for headway and closed 0.16% higher.
The Dow .DJI rose 0.6%, and the Nasdaq .IXIC fell 0.8%
as investors sold a spectacular tech rally that has swelled
titans Apple, Amazon, Microsoft and Alphabet so much that their
market value exceeds that of all Japan's equities combined.
Oil prices remain rangebound, but hung on to most of their
overnight gains. Brent futures LCOc1 slipped 0.5% to $44.12
per barrel and U.S. crude fell 0.5% to $41.70 a barrel. O/R