By Tamawa Desai
LONDON, Jan 28 (Reuters) - Global shares rose on Thursday as
investors pursued riskier assets after U.S. President Barack
Obama focused on job creation rather than any concrete details
of banking reforms which had spooked financial markets.
European stocks bounced backed from a one-week slide, but
gains were hampered by concerns about the fiscal health of
smaller euro zone countries such as Greece and Portugal, whose
government bonds continued to take a hammering.
Market optimism after Obama's first State of the Union
speech late on Wednesday pulled the dollar off five-month highs
hit after the U.S. Federal Reserve kept its low interest rate
policy intact as expected but saw one policymaker dissent.
Wall Street looked to open higher as U.S. stock futures rose
0.2 percent <SPc1>. World stocks as measured by MSCI
<.MIWD00000PUS> were 0.3 percent higher on the day.
"(Obama) held off from being as aggressive as he has been
towards Wall Street," said David Morrison, market strategist at
GFT Global. "The result was that the market was a lot happier."
The U.S. administration's proposals last week on restricting
risk-taking and potentially breaking up the banking sector had
fuelled a global market sell-off.
European shares <> gained 0.6 percent by midday trade,
after rising some 1.3 percent earlier.
Concerns about Greece and other peripherals weighed on the
euro <EUR=>, as the spread between Greek and German government
bonds hit a record high since the single European currency was
launched more than a decade ago.
Budget proposals from the Portuguese government on Wednesday
failed to reassure ratings firms [] []
and the premium to hold Portuguese debt compared with benchmark
German bonds also rose.
Credit default swaps, which indicate the cost of insuring
government bonds against default, also rose for both countries.
"Sentiment definitely remains negative for the euro because
of the Greece problem," said Lutz Karpowitz, currency strategist
at Commerzbank in Frankfurt.
"I thought the Greece story would eventually die down, but
that doesn't seem to be the cause, and there are more countries
in the pipeline (who are facing debt problems)."
BERNANKE EYED
The U.S. Federal Reserve kept interest rates steady and gave
a cautiously upbeat view on the economy. Markets will eye an
expected vote on Fed chief Ben Bernanke's second term in the
Senate on Thursday.
In Europe, German unemployment came in much better than
forecast while European Central Bank Executive Board member
Gertrude Tumpel-Gugerell said it was time fiscal and monetary
policy returned to "normal".
Central banks are cutting back on the excess liquidity
pumped into the financial system after 2008's banking turmoil
and markets are looking for signs of how fast the ECB and others
may complete the process and start to raise interest rates.
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies, was
flat on the day at 78.700 <.DXY>. It rose as far as 79.066, its
highest since August last year.
Bernanke had been widely seen as getting the support he
needs but a recent surge of public anger at big banks has meant
the vote could be a lot closer than expected. His terms as
chairman runs out on Sunday.
Data due out include U.S. durable goods orders which are
expected to show a rise in December, and weekly jobless claims.
U.S. crude oil futures rose above $74 a barrel, rebounding
from six-week lows [], while gold <XAU=> firmed after the
dollar eased.
(Additional reporting by Harpreet Bhal and Naomi Tajitsu;
editing by Patrick Graham)
