* World stocks at record high on vaccine optimism
* Oil adds to 16% November surge
* Dollar weakens on rising case numbers, yuan rising
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
*
By Marc Jones
LONDON, Nov 17 (Reuters) - World stock markets grabbed a
well-earned breather on Tuesday after a second major coronavirus
vaccine boost in the space of a week had propelled them higher
again and put Europe on course for its best month nearly three
decades.
The pan-European STOXX 600 dipped 0.4% .STOXX on the day
with Wall Street set to follow, but there was little sign of an
end to the November bull run that has also seen
confidence-sensitive commodities and emerging markets surge.
.EU EMRG/FRX O/R
MSCI's main 49-country world stocks index was perched at a
record high having risen 11% and every day but one this month,
while China's yuan hit a near 2-1/2 year peak in the currency
markets as the U.S. dollar continued to sag. /FRX Investors are in "full bull" mode, BofA's monthly investor
survey showed on Tuesday. With global economic growth and profit expectations running
at a 20-year high among those the bank surveyed, the "reopening
rotation" back into coronavirus-hit sectors is likely to
continue for the rest of the year, BofA added, although they did
also recommend cashing in in the coming weeks or months.
The latest boost had come from Moderna MRNA.O , which said
on Monday its experimental COVID-19 vaccine was 94.5% effective
in preventing infection based on interim late-stage data.
The U.S.-based firm became the second drugmaker, after
Pfizer PFE.N , to announce promising data. The news had sent
its shares up nearly 10%, though it was electric car maker Tesla
TLSA.O in the fast lane on Tuesday, racing up 11% in premarket
moves after it won a spot in the S&P 500. .N
Up about 450% in 2020, the California firm has become the
most valuable auto company in the world, by far, despite
production that is a fraction of rivals such as Toyota 7203.T ,
Volkswagen VOWG_p.DE and General Motors GM.N .
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.2% overnight, a day after hitting its
highest level since launching in 1987. .T .SS
Japan's Nikkei 225 .N225 rose 0.4% after hitting a 29-year
high the day before, but Chinese blue chips .CSI300 dipped as
recent bond defaults hit sentiment.
"The market is assuming that we can see the end of the
tunnel, that in 2022 a large part of the world's population will
start to receive access to vaccines," said Herald van der Linde,
HSBC's head of equity strategy for Asia Pacific.
There were initial indications that this was sparking a
change in investors' attitudes, he added.
CHINA AND BULLS
The positive vaccine news helped oil prices add to their 16%
November gains.
U.S. crude CLc1 inched up to $41.57 per barrel after
rising 3.02% on Monday, and Brent LCOc1 gained 0.7% after a
2.43% jump the day before.
In currency markets, China's central bank on Tuesday lifted
its official yuan midpoint to the highest in nearly 29 months,
underpinned by solid gains in spot prices a day earlier on the
back of strong economic data. "The authorities are making a lot of effort to prevent the
yuan from rising too fast," said a trader at a Chinese
bank. The vaccine news also helped the risk-friendly Australian
dollar AUD=D4 , which climbed to a one-week high against its
U.S. counterpart. Rising virus case numbers in the United States
clouded views on the dollar, adding to the 10.5% drop it has
seen against a basket of major currencies since March =USD .
Euro zone bond markets showed little reaction to Hungary and
Poland's veto of the EU's budget and recovery fund in early
Tuesday trade.
Italy was expected to sell a U.S. dollar bond while China
was preparing for a potentially record euro-denominated bond
sale which was due to be finalised on Wednesday.
Euro zone bonds, which sold off moderately and then recouped
losses later on Monday, were steady in early Tuesday trade, with
Germany's 10-year benchmark yield at -0.55% DE10YT=RR and
Italy's 10-year yield at 0.61%. IT10YT=RR
The closely watched gap between Italian and German 10-year
yields - effectively the risk premium on debt from Italy, one of
the main beneficiaries of the recovery fund - was near its
lowest since early 2018 at around 115 basis points.
The lack of market reactions "tend to reflect the market's
view that the EU will find a way to hammer out a compromise that
keeps all parties roughly happy," Andy Cossor, a strategist at
DZ Bank, said of the Polish and Hungarian vetoes.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
China's Yuan is surging https://tmsnrt.rs/3pECkSL
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