* Economic optimism countered by worries about China-U.S.
tensions
* Euro/dollar lowest since Nov on divergent COVID outlooks
* Oil settles as efforts to refloat beached Suez tanker
continue
* Turkey's lira set for worst week since 2018 after cbank
sacking
By Marc Jones
LONDON, March 26 (Reuters) - Stock markets and the dollar
zig-zagged higher on Friday, as hopes for economic recovery and
the week's easing of global bond market yields offset the
stresses of the world's most expense traffic jam.
As the last full week of a hectic first quarter drew to a
close, traders were watching desperate efforts to free a beached
supertanker in one of the world's most vital trade arteries, the
Suez canal, as well as the rising global COVID-19 case count.
Chinese markets had helped Asia rebound from a 3-month low
overnight by overcoming their latest U.S. relationship worries,
while a near 3% jump in commodity stocks, a weaker euro EUR=
and upbeat German data kept Europe .STOXX on course for a
fourth straight weekly rise. .EU
Wall Street was expected to edge higher at the opening .N .
Bond yields were also slightly up on the day, but 10-year
Treasuries were on track for their biggest weekly yield drop
since June. For German bunds it was 3-1/2 months, as the euro
zone's coronavirus woes support safe-haven assets there.
GVD/EUR
The euro's struggles are part of that too but the dollar
bulls were firmly in charge with the U.S. vaccine programme
ramping up.
The greenback's 0.3% rise on Friday USD= meant it had
clawed back almost all of its post-U.S. election fall. Emerging
markets currencies in contrast have had their worst run of the
year this week, not helped by a near 10% plunge in Turkey's lira
after another central bank governor sacking. EMRG/FRX
"We left 2020 with the validation of the consensus view the
dollar would weaken," said Vincent Manuel, chief investment
officer at Indosuez Wealth Management.
"We have woken up in 2021 facing the reality that the U.S.
is growing much quicker than Europe... so we have a massive
divergence".
Weekly money flow data from Bank of America showed global
investors have been darting for safety amid this week's drama.
They pumped $45.6 billion into cash funds, the largest since
April 2020 when COVID-19 was spreading fast.
The end of the week news flow has been slightly more
friendly though.
Business morale in Europe's biggest economy Germany is back
to its best in almost two years thanks to recovering global
demand for manufactured goods, data on Friday showed.
U.S. Labor Department figures on Thursday had seen U.S.
unemployment benefit claims drop to a one-year low, while
President Joe Biden doubled his near-term target for U.S.
vaccinations to 200 million shots in his first formal news
conference as president. "We now expect that the U.S. dollar will strengthen somewhat
over the next couple of years as the U.S. economy outperforms,"
analysts at Capital Economics said as they lifted their
greenback forecasts.
BLOCKED SUEZ
Turkey's markets were struggling to settle after the lira's
near 10% slump triggered by President Tayyip Erdogan's latest
central bank chief sacking, which has raised worries about a
full-blown crisis that would require capital controls.
EMRG/FRX
"If you can't raise rates and you don't have sufficient
reserves, then you don't have any other choice if you want to
limit exchange rate depreciation," Morgan Stanley's chief
economic advisor and former head of the IMF's European
department, Reza Moghadam, said.
Blue chip Chinese stocks .CSI300 rebounded more than 2%
though after a three-day losing streak, which, like emerging
market shares generally .MSCIEF , had left them at the lowest
level of the year.
"All the sanctions (on China) so far have been largely
symbolic and should have little economic impact. But the
Sino-U.S. confrontation is affecting market sentiment. It could
take some time for them to come to any compromise," said
Yasutada Suzuki, head of emerging market investment at Sumitomo
Mitsui Bank.
The dollar also rose to a new nine-month high against the
Japanese yen of 109.44 yen JPY= . The euro licked its wounds at
$1.1794 EUR= after falling to a four-month low on Thursday.
The ongoing efforts to dislodge the tanker in the Suez canal
saw oil prices rebound a tad from a 4% drop on Thursday, though
they are on course for their third straight week of losses on
worries about further reduction in demand. O/R In addition to Europe, major developing economies such as
Brazil and India are also struggling with a resurgence in
COVID-19 cases.
Brent LCOc1 was at $62.62, up 1.08%, U.S. crude CLc1 was
last up 1.33% at $59.35 per barrel, gold was flat and copper,
though more than 1% higher on the day, was still in its $8,600 -
$9,200 a tonne recent range. /MCU3=LX
Reeling from the blockage in the Suez, shipping rates for
oil product tankers have nearly doubled this week, and several
vessels were diverted away from the vital waterway. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
Global markets over the last week https://tmsnrt.rs/2PsNMU0
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>