Bank worries hit Europe but global stocks steady
Global shares held steady on Monday, working on their third consecutive month of gains, but there were losses in Europe after recent gains amid worries about bank earnings.
Investors were generally lifted by last week's smaller-than-expected number of job losses in the United States, which reinforced expectations that the global economy, while still weak, may have hit bottom.
Increased optimism about the global financial system is also feeding a broad rally.
MSCI's all-country world stock index <.MIWD00000PUS> edged up 0.2 percent, having gained 6 percent so far this year. This came after Asian shares rose to their highest level in seven months.
But European started the week on a down note, with some concerns about upcoming results from banking giant HSBC
The FTSEurofirst 300 <.FTEU3> index of top European shares was down 1.0 percent after ending 1.7 percent higher at a four-month closing high on Friday.
The index has gained about 33 percent since hitting a record low in early March.
We have good chances for a further positive development but the big picture still sounds a note of caution, said Roger Peeters, strategist at Close Brothers Seydler.
As well as signs of improvement in the world economy, U.S. company results have generally been positive.
Thomson Reuters research shows that of the 424 S&P 500 <.SPX> companies that have reported Q1 2009 earnings to date, 65 percent have reported earnings above analyst expectations and 28 percent below forecasts.
In aggregate, companies in the S&P 500 are reporting earnings that are 6.0 percent above estimates, which is well above the -9.5 percent average over the past eight quarters, it said in a weekly note.
HIGHER DOLLAR
The dollar inched higher on Monday, after earlier hitting its lowest in seven weeks against the euro.
Emboldened earlier by slowing U.S. job losses on Friday, investors in Asia diversified into other currencies, pushing the dollar index <.DXY> to a fresh four-month low on hopes the worst of the economic slump may be over.
But concerns about HSBC took the shine off the positive sentiment and supported the dollar.
We had a big squeeze up during Friday and into this morning, especially in terms of euro/dollar which went up toward the $1.37 resistance, said Rabobank strategist Jeremy Stretch.
But while we have seen some caution this morning that's capped the dollar's slide, the direction in the short-term is still going to be determined by equity markets sentiment and global recovery prospects.
The euro hit a seven-week high at $1.3670 on trading platform EBS at one point but later reversed course to stand at $1.3607, 0.3 percent down from late U.S. trade on Friday.
Euro zone government bonds rose as European shares fell.
The two-year Schatz yield was down 4 basis points at 1.286 percent, while the 10-year Bund yield was down 4 basis points at 3.418 percent.
(Additional reporting by Christoph Steitz and Kirsten Donovan, editing by Mike Peacock)
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