(Updates lede, headline and prices throughout with U.S. market
open)
By Huw Jones and Chibuike Oguh
LONDON/NEW YORK, Aug 9 (Reuters) -
Global shares extended gains on Friday, recovering further
from their recent big sell-off and boosted by positive economic
data and signals from Fed policymakers that they could cut rates
as early as September.
A trio of Federal Reserve policymakers indicated on Thursday
that they were more confident that inflation is cooling enough
to cut rates, and this - along with a bigger-than-expected fall
in U.S. jobless claims data - helped to underpin the recovery.
The MSCI All Country stock index, was up
0.40% to 784.92 points, recovering much of the ground lost
during the week.
On Wall Street, all three indexes pared early session losses
and were trading higher led by gains in technology, consumer
discretionary, healthcare and financial stocks.
The Dow Jones Industrial Average rose 0.11% to
39,490.53, the S&P 500 gained 0.33% to 5,336.68 and the
Nasdaq Composite gained 0.29% to 16,709.13.
In Europe, the STOXX index of 600 companies was up
0.55%, with the loss for the week all but erased. In a sign of
calmer nerves, the VIX index, also known as Wall Street's
'fear gauge', tumbled nearly 2%, a far cry from its record
one-day spike on Monday.
Divergent central bank interest rate moves, a repricing of
recession probability in the United States, thinner liquidity in
August accentuating volatility, and Middle East tensions had all
combined a week ago to trigger the sharp sell-off in stocks
after their months-long winning streak.
Some analysts urged caution despite this week's strong
recovery.
"We are still in the month of August, so we can still have
some volatility," said Marie de Leyssac, portfolio manager at
Edmond de Rothschild Asset Management.
Investors will continue to study employment data, keep an
eye on the Bank of Japan, and particularly on the annual meeting
of global central bankers hosted by the Kansas City Fed in
Jackson Hole later this month, she said.
"This year I think it is a really important meeting because
we will have more insight into what (Federal Reserve Chair)
Jerome Powell sees for the future, and maybe more insight on the
path to lower rates," de Leyssac said.
Before then, investors will scrutinise next week's U.S.
consumer prices and retail sales figures for fresh evidence on
chances of the economy escaping a hard landing.
NIKKEI RECOVERS
Japan's Nikkei stocks benchmark closed 0.6% higher,
erasing most of the losses since a 12.4% crash on Monday.
The Nikkei has managed to claw back most of those losses,
which were prompted by fears of recession and the unwinding of
investments funded by a soft yen, finishing the week with a
comparatively tame 2.5% decline.
The yen also veered from negative to positive
through Friday's session, last trading at 147.060 per dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan
climbed 1.66%, more than reversing the drop from
Thursday. For the week, it has reversed earlier losses to be
largely flat.
"The prospect of better-than-feared U.S. growth and a weaker
yen constrain the fundamental and technical risks that inspired
the extreme volatility experienced at the start of the week,"
said Kyle Rodda, a senior financial market analyst at
Capital.com.
Oil prices were headed for weekly gains of around 3%
as fears of a widening Middle East conflict persisted, with
Brent crude futures up 0.35%, at $79.44 a barrel while
U.S. West Texas Intermediate crude futures added 0.45% to
$76.53.
The U.S. dollar index, which measures the greenback
against a basket of currencies including the yen and the euro,
fell as markets gave up bets on an emergency rate cut from the
Fed. It fell 0.2% at 103.07, with the euro up 0.05% at
$1.0923.
Bond yields have climbed this week with safe-havens in less
demand, but began easing as confidence returned to markets. The
yield on benchmark U.S. 10-year notes fell 5.7 basis
points to 3.94%.
Gold prices were a touch firmer, with spot gold
adding 0.09% to $2,428.96 an ounce. U.S. gold futures
fell 0.09% to $2,420.10 an ounce.