* World stocks drift higher after sharp gains on Tuesday
* Euro zone govt bond futures fall, yen under pressure
* Focus on this week's ECB rate decision, economic numbers
By Atul Prakash
LONDON, Dec 2 (Reuters) - World stocks ticked higher on
Wednesday with anxiety over Dubai's debt problems taking a
backseat and focus shifting to this week's economic numbers and
the European Central Bank's rate meeting.
Euro zone government bond futures edged lower as traders
braced for a U.S. private sector report later in the session for
hints on the key payrolls numbers due on Friday. Investors were
unwilling to take on big bets ahead of the European Central Bank
policy meeting on Thursday.
Gold <XAU=> hit a record high above $1,215 an ounce and key
base metals rose further, but oil <CLc1> prices came under some
pressure on data showing U.S. crude stocks rose much more than
expected. The yen broadly weakened as investors moved to stocks
and some commodities.
Investor appetite for risky assets rose, with the VDAX-NEW
volatility index <.V1XI> down 2 percent. The lower the index,
which is based on sell and buy options on Frankfurt's top-30
stocks <0#.GDAXI>, the higher the market's desire to take risk.
The broader all-country world index <.MIWD00000PUS> gained
0.1 percent at 0935 GMT, while FTSEurofirst 300 index <>
of top European shares was flat after recording its biggest
one-day percentage gain in more than four months on Tuesday.
"After Tuesday's bounce back it's no real surprise investors
are taking a breather today with little about to inspire fresh
direction," said Mic Mills, senior trader at ETX Capital.
"All eyes are now focused on Friday's U.S jobs report as the
Dubai drubbing fades into the memory," he added.
The international impact of Dubai's shock debt announcement
last week lessened considerably amid expectations that the
crisis will be largely contained to the emirate and a handful of
large creditors and that problems will not infect debt markets
much beyond the Gulf.
State-controlled Dubai World [], which led the
emirate's transformation into a regional hub for finance,
investment and tourism, unveiled details late on Monday of the
restructuring and which parts of its empire were affected. The
process will focus on $26 billion of debt owed by its main
property firms, Nakheel and Limitless. []
Investors' attention has turned to the ECB's policy meeting
on Thursday. It is widely expected to keep its refi rate on hold
at one percent, but also to give guidance on the timing and
extent of how it intends to withdraw generous liquidity stimulus
from the system.
November's U.S. employment report by Automatic Data
Processing at 1315 GMT is expected to show 155,000 jobs lost in
the month after 203,000 lost in October.
YEN FALLS, BONDS WEAKER
The yen was broadly weaker as traders took Japan's new
monetary policy measures, unveiled the previous day, and gains
in stocks and some commodities, as signals to sell the ultra
low-yielding currency.
The dollar held its ground against most major currencies,
however, suggesting the resumption of "risk on" trades across
asset markets, supported by receding fears over Dubai's debt
problems, wasn't the principal driver of currencies.
The dollar has been widely considered the funding currency
of choice in recent months, as investors have sold the
low-yielding unit for other currencies and assets. Asian central
banks were said to buying dollars on Tuesday.
"The big selling flows in dollar/yen and cross/yen last week
are drying up somewhat," said Neil Jones, head of FX hedge fund
sales at Mizuho in London.
In the bond market, euro zone government bond futures failed
to build on some gains made in late trade on Tuesday and edged
down, tracking U.S. Treasuries lower.
"We have the (U.S.) ADP employment report coming up. We are
a bit nervous going into the ECB," a London trader said.
European corporate credit default swaps were tighter after a
rally in stocks. The investment-grade Markit iTraxx Europe index
<ITEEU5Y=GF> was at 83.50 basis points, according to data from
Markit, 1 basis point tighter versus late on Tuesday, according
to data from BGC Partners.
(Additional reporting by Jon Hopkins, Emelia Sithole-Matarise
and Jamie McGeever; editing by Stephen Nisbet)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Hub click on http://blogs.reuters.com/hedgehub)
((atul.prakash@reuters.com; +44 20 7542 6189; Reuters
Messaging: atul.prakash.reuters.com@reuters.net))
