LONDON (Reuters) –
World stocks rallied to fresh 9-1/2 month peaks on Friday as favorable corporate earnings fueled recovery hopes, while European government bonds also rose as investors grew cautious ahead of key U.S. growth data.
Investors have bought risky assets across the board for three weeks in a row after a recent run of better-than-expected corporate profits on both sides of the Atlantic.
But markets were cautious ahead of U.S. gross domestic product data on Friday, which some said could prompt some month-end profit taking. The data is expected to show the world's biggest economy contracted 1.5 percent, compared with a 5.5 percent contraction recorded for the first quarter.
"There is no doubt that the headline act will be the U.S. GDP numbers," said Jimmy Yates, head of equities at CMC Markets.
"A weaker number here could set the tone for August and show us that we still have a long way to go before we start seeing growth in the worlds largest economies." The MSCI world equity index (.MIWD00000PUS) rose 0.4 percent, bringing gains to more than 8 percent this month. Since January, the index has risen 16.7 percent, recouping some of the 40 percent-plus losses made when the financial crisis deepened last year.
The FTSEurofirst 300 index (.FTEU3) erased early losses to rise 0.3 percent while emerging stocks (.MSCIEF) rose 0.8 percent.
Asian stocks outside Japan (.MIAPJ0000PUS) hit 11-month highs while Shanghai stocks (.SSEC) rose 2.7 percent, their biggest daily gain in two months.
China's central bank reassured investors this week that it would stick to a loose monetary policy stance to support the economy and said it would ensure sustainable credit growth.
U.S. crude oil rose 0.3 percent to $67.19 a barrel.
The September bund futures rose 42 ticks. U.S. Treasuries were also firmer after a seven-year U.S. auction on Thursday met with strong demand.
For the week, the Treasury sold a record $115 billion in longer-dated Treasuries and $120 billion in bills.
The dollar (.DXY) fell a quarter percent against a basket of major currencies while the yen rose 0.3 percent to 95.28 per dollar.
Analysts say the yen could come under pressure with domestic investors seeking higher overseas yields. According to data compiled by Reuters, newly launched Japanese mutual funds that invest in global assets have attracted 36.4 billion yen ($382 million) so far on Friday.
(Additional reporting by Joanne Frearson; editing by Patrick Graham)
Eyeing a better price, U.S. auto maker Ford Motor Co (F.N) is slowing down the bidding process for its Volvo car unit, the Wall Street Journal said, citing a person close to the company.
Ford will wait for General Motors (GM.UL) to sell Opel and is looking at inviting the losing bidder to bid for Sweden-based Volvo, the person told the paper.
"Expect nothing to happen for another three to four weeks" with Ford waiting for GM to finalize an Opel buyer, the person was quoted by the paper as saying.
Ford did not immediately respond to a Reuters email seeking comment that was sent outside of regular U.S. business hours.
The U.S. car maker put the money-losing Volvo cars unit up for sale in December, as it looked to cut costs and raise cash amid industry-wide record-low vehicle sales.
Ford Chief Financial Officer Lewis Booth told reporters after second-quarter results last week that the company was in talks with a number of parties on Volvo.
China's Beijing Automotive Industry Holding Corp (BAIC), rival Geely, and at least one "Western industrial group" remain interested in the Volvo car unit, a person close to the situation told Reuters last month.
BAIC, which failed in its bid for Opel, had the support of the Beijing municipal government to bid for Volvo, other sources said last week.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)
U.S. federal regulators have raised the number of struggling banks which they have essentially put on probation, forcing them to fix their problems to avoid potential failures, the Wall Street Journal said.
Citing data obtained under the Freedom of Information Act requests, the paper said The Office of the Comptroller of the Currency (OCC), along with the Federal Reserve, have issued more memorandums of understanding so far this year than in all of 2008.
At the current rate of at least 285, the Fed, OCC and Federal Deposit Insurance Corp are in line to issue nearly 600 of these secret agreements this year, the paper said, compared with last year when 399 such agreements were issued.
The memorandums -- which can force financial institutions to increase their capital, overhaul management or take other major steps -- are not bound to be made public by the banks, the Journal said.
The OCC, a division of the Treasury Department that supervises national banks, could not be reached outside regular business hours.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Greg Mahlich)