* Dollar slips after overnight gains, euro zone GDP grows
* World stocks drift higher; commodities gain
By Dominic Lau
LONDON, Nov 13 (Reuters) - The U.S. dollar eased on Friday
after overnight gains and euro zone growth data showed the
region pulled out of recession, boosting metal and crude prices,
while world stocks drifted higher.
The dollar <.DXY> rose overnight against a basket of
currencies before succumbing to another sporadic bout of
profit-taking, and traders said the currency's broad weakness
was likely to continue over the longer term.
World stocks measured in the MSCI All-Country World Index
<.MIWD00000PUS> put on 0.1 percent, lifted by a 0.3-percent rise
in Europe's FTSEurofirst 300 <> index, though Japan's
Nikkei average <> lost 0.4 percent.
U.S. stock index futures <DJc1> <SPc1> <NDc1> edged 0.3-0.4
percent higher, pointing to a firmer start on Wall Street.
The Dow Jones industrial average's <> six-day winning
run came to a halt on Thursday, partly because a guarded outlook
from Wal-Mart <WMT.N> fanned worries about consumer spending.
"It's encouraging to see that the euro zone has returned to
growth in the third quarter," said RBS currency strategist Paul
Robson.
"Data out of China has been robust and policymakers around
the world have indicated that they will keep monetary policy
loose, which is broadly supportive of higher-yielding and
commodity-related currencies."
The euro zone economy jumped out recession in the third
quarter, but with slightly less spring than expected after the
area's top three economies fell short of market forecasts.
[]
The dollar fell 0.6 percent to 89.77 yen <JPY=>, while the
euro <EUR=> was up 0.3 percent at $1.4889.
U.S. President Barack Obama kicks off his first official
tour of Asia by meeting Japanese Prime Minister Yukio Hatoyama,
then goes to Singapore, China and South Korea. []
High on the agenda will be U.S. calls for Asian countries to
do more to stimulate domestic demand instead of relying on
exports to America. That would likely require much of Asia, and
China in particular, to let their currencies appreciate.
A state-run Chinese newspaper, however, played down
speculation of an imminent significant rise in the Chinese yuan.
ASSET ALLOCATION
UBS said it retained its existing asset allocation of
overweight global equities, a small overweight position in
high-yield corproate bonds and commodities and a large
underweight of cash. It was neutral on government bonds, high
grade credits and inflation-linked bonds.
"Until leverage resumes market outcomes will be driven
mostly by growth and earnings expectations," UBS said in a note.
"Importantly ... uncertainly about monetary policy 'exit
strategies' is likely to boost market volatility next year. And
with many asset classes now close to 'fair value', risk-adjusted
returns are likely to be lower in the year to come."
The VDAX-NEW volatility index <.V1XI>, a measure of investor
risk appetite or aversion, was down 0.7 percent. The lower the
volatility index, the higher is investors' appetite for risky
assets such as equities.
Aided by the weaker dollar, crude prices <CLc1> rose above
$77 a barrel, while gold <XAU=> advanced 0.4 percent to
$1,108.45 an ounce.
Bullion has gained more than 5 percent as it marked a new
record high in six out of the eight sessions through Thursday,
touching an all-time peak of $1,122.85 on the view that dollar
would remain weak.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
steady at 3.446 percent, while those on 10-year Bund <EU10YT=RR>
was down 3 basis points at 3.342 percent.
(Additional reporting by Jessica Mortimer in London, Wayne Cole
in Sydney and Miho Yoshikawa in Tokyo; Editing by Toby Chopra)
