By Jeremy Gaunt, European Investment Correspondent
LONDON, July 1 (Reuters) - World stocks began the third
quarter on an upbeat note on Wednesday with European and
emerging market shares rising around 1 percent and oil climbing
on hopes for a recovery in demand.
New York crude <CLc1> was up more than $1 near $71 a barrel.
Oil prices, which had tumbled from a record high of over
$147 struck in July last year, have rallied in recent months on
a weak dollar and hopes of a global economic recovery to chalk
up a 42 percent gain in the last quarter -- the highest
quarterly gain since 1990.
Equities, meanwhile, had a record quarter with MSCI's all
country index <.MIWD00000PUS> gaining 22.2 percent over the
three months, the most since the index was compiled in 1988.
"More and more evidence is accumulating to suggest that the
decline in economic activity is coming to an end," Barclays
Wealth said in a note.
It advised its clients to increase risk in their portfolios,
mainly by adding to equity holdings but also in commodities.
European shares were boosted by energy and banking stocks.
The FTSEurofirst 300 <> was up 1.2 percent, helping
add a third of a percent to the MSCI index. Emerging market
stocks <.MSCIEF> were up 1 percent.
Emerging markets were among the big winners of the past
quarter. The MSCI sub-index for the sector gained 33.6 percent.
Investors appear to be increasingly confident in global
recovery. Reuter asset allocation polls for June showed cash
reserves at a 23-month low, a sign that money is being put to
work.
But they are also keen to see more concrete signs of
economic revival before becoming fully persuaded.
Euro zone manufacturing activity contracted less than
initially thought in June but sharp differences between
countries supported evidence from Asia and the United States
that broad recovery would be slow.
DATA AWAITED
The euro inched up, supported by the higher European shares
but not very moved by the manufacturing report.
Investors were also eyeing a policy announcement by the
European Central Bank on Thursday, as well as U.S. non-farm
payrolls, which will be scrutinised to gauge whether the
deterioration in the U.S. jobs market is starting to stabilise.
The dollar was little changed against a basket of
currencies.
The euro <EUR=> was up close to 0.2 percent on the day at
$1.4056.
The dollar index <.DXY> which tracks its performance against
a basket of currencies, was essentially flat.
Euro zone government bond yields were mixed with the 10-year
<EU10YT=RR> slightly above at 3.4 percent.
(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)
(Editing by Ron Askew)
